Can a Will override my insurance nomination(s) and vice versa?
Summary
A Will cannot override a trust nomination but it may override a revocable nomination provided the Will is made at a later date and in a very specific manner (e.g. the insurer's name, policy number, the new beneficiary’s name, NRIC, address, date of birth must all be specified, and allocated death benefits must add up to 100%). However, it is easier and with more certainty to just fill up a new insurance nomination form (or the revocation form).
Important: Wills generated in getArrange.com have a clause not to override insurance nominations, regardless of whether the nomination is made earlier of later. If you have an existing nomination but prefer your policy distributions to follow the Will created here, you will need to REVOKE any prior nominations.
Trust Nomination vs. Revocable Nomination
- Trust Nomination: A Will cannot override a trust nomination (also known as an irrevocable nomination). When a trust nomination is made, the policy is no longer part of your estate and, therefore, cannot be distributed through your Will.
- Revocable Nomination: A Will made later can potentially override a revocable nomination, provided it is written in a specific manner (see below). Conversely, a revocable nomination made after a Will can override the Will in relation to the insurance policy.
Payment by the Insurer
For the exact policies and procedures of each insurer, please do check with the respective insurer.
The Insurance Act allows insurer to make direct payment to nominees without requiring probate in certain situations. However, specifically for revocable nomination, insurer may still require probate or letters of administration for additional certainty before making payment.
- Trust Nomination: Insurer may pay both the living benefits and death benefits to the trustee for the benefit of every nominee under that nomination, or to the nominee who has attained the age of 18, or to the parent or legal guardian of the nominee under 18, or to the personal representatives of the estate of the nominee who is deceased.
- Revocable Nomination: Insurer may pay the death benefits "according to the latest properly executed instrument (be it a revocable nomination or a Will) that is known to the insurance company at the time of the policy owner's death". Payment may go to the nominee who has attained the age of 18, or to the parent or legal guardian of the nominee under 18, or to the personal representatives of the estate of the nominee who dies after the policyowner. They may also pay it to the person who produces the grant of probate i.e. the Executor.
Important Note on Revocable Nomination vs. Will
It is important to note that the money may not automatically belong to whoever the insurer pays to. True ownership of those funds still depends on whether the Will revokes the revocable nomination.
For instance, if the insurer only knows about the revocable nomination that was submitted but has no idea that a Will exists which was signed at a later date (and specifically written to override that revocable insurance nomination), the insurer may pay out the money to the nominees according to the revocable nomination. However, the money would still belong to the beneficiaries according to the Will and not the insurance nominees (barring any other special terms written in the Will and/or the insurance policy/nomination form).
Similarly, the insurer may pay out the money to the Executor who produces the grant of probate even if the Will may not necessarily have overridden the nomination in which case, the money should still belong to the nominees.
Example Case: [2021] SGDC 100
This case highlights the potential issue of using Wills to override nominations. A client bought a life insurance policy in 1995 and nominated [A] as the sole nominee. In 2005, the client decided to leave the policy 100% to [B] instead of [A], but her agent told her that she can do so by making a Will.
The client then made a valid Will naming [B] as both beneficiary and executor, but did not update her insurance nomination, nor did the Will specify the necessary details of the insurance policy.
After the client passed away in 2016, the insurer paid approximately S$200k in policy proceeds to her executor [B]. [A] then sued the estate and the insurer for the payout but failed, because there is nothing wrong for the insurer to make payout to the executor. However, the court ruled that the Will did not revoke or override the nomination, and the beneficial interest of the payout still belonged to [A].
Requirements for a Will to Override a Revocable Nomination
According to the Insurance Act, there is a specific way you need to draft a Will for it to override a revocable nomination. For example, the particulars of the relevant insurer's name and policy number, the new beneficiary’s name, NRIC, address, date of birth and their allocated portion of the death benefits (which has to add up to 100%) must ALL be specified in the Will in order to revoke that revocable nomination.
For full details, refer to the Insurance Act s133(7)(b) and Insurance (Nomination of Beneficiaries) Regulations s5(3)).
getArrange Wills do not revoke insurance nomination
Your policies will follow our Will distribution only if you have revoked your insurance nomination or when the revocable nomination is deemed to be revoked in the event there is no surviving nominee. If you want the distribution of your policies to follow your Will made in getArrange.com instead, you will need to REVOKE the previous nominations.
Within our platform, we have a clause stating that all interest, benefits and net proceeds of all insurance policies shall be distributed to the person(s) nominated in the said policies REGARDLESS whether the nominations were made earlier or later. Of course, this means that if you have not made any nominations or if your revocable nomination is deemed to be revoked when there are no surviving nominee, then it will be distributed according to your Will like any other assets.
The rationale behind is simple. From the earlier discussion, you can see how it is easier and with more certainty to just fill up a new insurance nomination form (or the revocation form) than to write a Will to override your revocable nomination. Additionally, while your respective insurance companies do know of your insurance nominations (since it is done through them), they do not automatically know if you have written a Will to give their policy to a different person. This can potentially lead to disputes down the road.
Insurance nominations also have their benefits and purposes, which we do not want our Will to conflict with. Your Financial Adviser can probably explain this better than us.