The New Nomination of Beneficiares Framework

I had reviewed serveral policies in my 10 over years of practice and one of the issues with insurance policies was the Section 73 of the conveyancing and Law of Property Act or commonly known as the Section 73. An insurance policy is deem to be issued under Section 73 as long as you nominated your spouse or children as the beneficaries and it automatically becomes a trust policy. What this means is as a policy holder, you have no vested interest in the policy. One of the main concern of this Section 73 is that during a case of divorce, the spouse at the point of nomination is the legal beneficary regardless if you re-married or not.

Good news is that with effect from 1st Sep 2009, there is change to the law on the nomination beneficiaries. There are now two nominations – Section 49L & Section 49M. I shall do a brief explaination of the difference between the two and please drop me an email or contact your financial advisor if you need any clarification.


Section 49L

Section 49M

Beneficiary ONLY Spouse/Children. Anyone.
Revocable Only with prior consent from the beneficiary/legal guardian. Yes. Anytime by the Policy owner. There is no need to seek consent from anyone else.
Creditors Creditors has no rights to the death proceed. Creditors has rights to the death proceed.
Will made after nomination No changes Supersede by Will. Nomination deemed revoke.
Death of nominee/beneficiary Policy proceed form part of beneficiary’s estate. Nomination deemed revoke if sole beneficiary dies. Nomination to be distributed proportionally among surviving beneficiaries.
Living benefit                              (e.g. critical illness, TPD) Proceed goes to beneficiary. Proceed goes to policy owner.
Nomination by Muslim Yes Must seek MUIS approval to confirm the distribution is according to Muslim law.


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