The purpose of having insurance is to protect yourself and your loved ones financially in case of unexpected events. Should something unfortunate happen to you, it’s important your loved ones are able to receive your policy’s payout fast and with no hassle.
To ensure this, you must make a nomination for your policy, and there are a few important things you should be aware of about the nomination process so that you select the right individual(s) to receive your policy’s death benefit.
You can nominate any individual, either during or after you have signed up for your policy. You will usually be asked to fill up a form providing important details such as your nominee's full name, date of birth and MyKad number.
You can also nominate more than one individual and indicate the portions to be paid out to each of them. If you don’t specify their share, the payout will be distributed equally.
The terms “nominee” and “beneficiary” are often used interchangeably. However, in the context of insurance in Malaysia, it’s important to note that these two terms do not always mean the same thing.
According to the Financial Services Act 2013, depending on your relationship with the nominee, he or she will either be a beneficiary OR an executor.
So while you are free to nominate any individual(s), not all of them can be your beneficiary(ries).
If you are single, nominate your parent(s), as they are your legal beneficiaries. If you are married, your legal beneficiaries would be your spouse and child/children. In both cases, a trust will be established under their name(s).
If you nominate someone other than your parents, spouse or children (eg. your siblings or friends), they will receive the money as an executor and must distribute it according to your will. If you didn’t leave a will behind, then the payout will be based on applicable laws of distribution.
For Muslims, regardless of relationship, the nominee(s) can only receive the payout as an executor, and the funds must be distributed according to Islamic Sharia law.
Your family or friend may need to obtain a Grant of Probate, Letter of Administration or Distribution Order. This process can potentially take several years, and you don’t want that for your loved ones!
Yes, you can. Your latest nomination will then supersede all previous nominations.
If your nominee(s) passes away while you are still alive, your nomination will be considered revoked and you will be required to designate one or more new nominee(s).