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Let’s start with the basics, what is nomination?

In the insurance world, the nomination is the process of naming the beneficiaries of your insurance policy.

In the case of life or accidental death insurance, the persons you nominate will receive the sum assured upon your death.

Why is it important to nominate?
If you do not nominate, there will be a delay in paying out the sum assured to your family. Insurance companies will normally wait until they receive the official Grant of Probate or Letter of Administration or Distribution Order before paying the proceeds.

Obtaining these can take several years, and your loved ones will have to go through a lot of legal hassle. By making a nomination, the probate/administration/distribution documents are not needed by the insurance company and the sum assured can be disbursed quickly.

Additionally, a nomination enables you to decide on the share of each nominee. For example, you can allocate half of the insurance proceeds to your surviving spouse, and a quarter each to your 2 children. Or allocate a percentage to each of your surviving parents since you're no longer around to support them.



How to nominate?

Nomination is usually done either during the enrollment process or after (once your policy has been issued), depending on the insurer. Your insurance company would either present you with an online nomination form, or a physical form, where you will be required to fill up details of your nominees such as name, date of birth, NRIC/Passport number, their shares, and their relationship with you.

Once you have submitted your nomination form, a final step we advise is to call your insurer to confirm that they have registered your nominees.

There are five main types of life insurance that you must know about before deciding to invest in a policy.

o Term Life Insurance: This policy offers a large sum of money assured to your loved one after your death at the cost of a nominal premium amount. However, this does not have any maturity value.

o Endowment Plans: This plan offers a lump sum amount of money at the end of the tenure of your plan. Moreover, it gives you a life cover until maturity.

o Money Back Plans: These plans provide you with an opportunity to enjoy payouts at regular intervals (usually 5 to 10 years). These payouts are a certain percentage of the sum assured under your plan.

o Unit Linked Investment Plans: This a hybrid product that can be understood as a mutual fund wrapped in a life insurance policy. While offering market-linked incentives, you get the comfort of a life cover.

o Annuity/Pension Plans: This is popular among those investors who want to reap its benefits post-retirement when there is no regular source of income while the expenditure often witnesses an increase. These plans are of two types – deferred and immediate. In a deferred annuity plan, you start receiving regular income after a few years. On the other hand, immediate annuity plans offer you a regular income immediately after the purchase of the plan.