Name the Nominee(s) For Your Insurance.

Once again I ask you, why do you want to buy an insurance policy? Of course, it is for your life protection and to provide financial security to your loved ones if anything happen to you. It can be your spouse, your children, your mother, your father and so on.

 To ensure that the rightful person/ persons received the proceed of your insurance coverage money, in the event anything happen to you. You have to make a nomination to your policy!

What is nomination for an insurance policy?

In a simple layman words, the meaning for insurance’s nomination à It is a person/ persons who you really want to give your insurance coverage money, if anything happen to you.

Based on Insurance Act 1996 – Part XIII Payment of Policy Moneys under a Life Policy or Personal Accident Policy under Section 163 – Power to make nomination

(1) A policy owner who has attained the age of eighteen years may nominate a natural person to receive policy moneys payable upon his death under the policy by notifying the licensed insurer in writing the name, date of birth, identity card number or birth certificate number and address of the nominee-

(a) when the policy is issued, or
(b) after the policy has been issued, together with the policy for the licensed insurer's endorsement of the nomination on the policy.

(2) A nomination made under subsection (1) shall be witnessed by a person of sound mind who has attained the age of eighteen years and who is not a nominee named under that subsection.

(3) The licensed insurer -

(a) shall prominently display in the nomination form that the policy owner has to assign the policy benefits to his nominee if his intention is for his nominee, other than his spouse, child or parent, to receive the policy benefits beneficially and not as an executor;
(b) shall record the nomination and the particulars of the nominee in its register of policies; and
(c) shall return the policy to the policy owner after endorsing the nomination on the policy or by issuing an endorsement to the original policy by registered mail to the policy owner and the nomination shall take effect from the date the nomination is registered by the licensed insurer.

(4) A failure to comply with subsection (3) shall not affect the validity of the nomination if it is otherwise proved that the nomination was made by the policy owner and given to the licensed insurer.
(5) A nomination made under subsection (1) may be in favour of one person or several persons and where there is more than one person nominated, the policy owner may direct that specified shares be paid to the persons nominated and in the absence of direction by the policy owner, the licensed insurer shall pay the persons in equal shares.

Section 166. Trustee of policy moneys.


(1) A nomination by a policy owner, other than a Muslim policy owner, shall create a trust in favour of the nominee of the policy moneys payable upon the death of the policy owner, if-

(a) the nominee is his spouse or child; or
(b) where there is no spouse or child living at the time of nomination, the nominee is his parent.

(2) Notwithstanding any written law to the contrary, a payment under subsection (1) shall not form part of the estate of the deceased policy owner or be subject to his debts.
(3) The policy owner, by the policy, or by a notice in writing to the licensed insurer, may appoint trustees of the policy moneys and where there is no trustee-

(a) the nominee who is competent to contract; or
(b) where the nominee is incompetent to contract, the parent of the incompetent nominee and where there is no surviving parent, the Public Trustee,

shall be the trustee of the policy moneys and the receipt of a trustee shall be a discharge to the licensed insurer for all liability in respect of the policy moneys paid to the trustee.
(4) A policy owner shall not deal with a policy to which subsection (1) applies by revoking a nomination under the policy, by varying or surrendering the policy, or by assigning or pledging the policy as security, without the written consent of the trustee.
(5) Nothing in this section shall prejudice a creditor of a policy owner from applying to the court for a declaration that this section, wholly or partly, is inapplicable to any particular policy on the ground that the premiums under that policy were paid to defraud the creditor.

Section 167 Nominee Other Than a Nominee under Subsection 166 (1)

(1) A nominee, other than a nominee under subsection 166(1), shall receive the policy moneys payable nominee on the death of the policy owners as an executor and not under solely as a beneficiary and any payment to the nominee shall form part of the estate of the deceased policy owner and be subject to his debts and the licensed insurer shall be discharged from liability in respect of the policy moneys paid.

(2) Subsection (1) applies to a nominee of a muslim policy owner who, on receipt of the policy moneys, shall distribute the policy moneys in accordance with Islamic law.

Section 168 Assigned or Pledged Policy Moneys

(1) Notwithstanding a nomination under section163 or the creation of a trust under subsection 166(1), where the policy moneys, wholly or partly, have been pledged as security or assigned to a person, the claim of the person entitled under the security or the assistance shall have priority over the claim of the nominee and subject to the rights under the security or the assignment being preserved, the license insurer shall pay the balance of the policy moneys to the nominee.

(2) Where more than one person are entitled under the security or the assignment, the respective rights of the persons entitled under the security or the assignment shall be in the order of priority of the date on which the security or the assignment was created, both security and assignment being treated as one class for this purpose.

For further details of nomination, you can refer to Insurance Act 1996 by Bank Negara Malaysia.

The nomination can be made during the time you purchase the policy. You can check with the insurance agent which sold the policy to you on how to do the nomination. Normally, the nomination form will be attached together with the proposal form.

You also can make the nomination during the duration of the policy. You also have the option to change the nomination made previously by submitting a new nomination form duly completed, signed and witnessed to the insurance company. The endorsement page will be given to you and you should keep together with the Policy Contract which you received during the time you buy the policy.

So, don’t forget to do the nomination once you buy your policy. It will make your life and your loved ones easier if anything happen to you at later stage.