Why You Should Do An Insurance Nomination

Here is a Step by step guide on how to submit your nomination form!

But let’s discuss why you should do a nomination.

Reason 1

If there’s no nomination, the insurance company may pay up to $150,000 to a proper claimant.

The balance will require a Grant of Probate (if there’s a will) or Grant of Letters of Administration (if no will done).

The problem is it can cost $5,000 to $10,000 to obtain a Grant of Letters of Administration. Not just that, it will also take very long to obtain this. Usually 1 year or up to 2 years.

Even with a will, it takes some time.

So, any death benefit that is more than $150,000 will be very costly and time consuming to settle.

Reason 2

A proper claimant can be any of the following people:

  • Spouse
  • Parents
  • Children
  • Siblings
  • Niece, Nephew

If you don’t do a nomination, insurance company will not know who to pay to.

So, because any of the people above can come forward to claim, there might be a dispute if 2 or more people file for claim.

That will take even longer for the claims to be settled.

So now we understand the importance of nomination, let’s move on to the steps!

Step 1 – Print

Print out the Revocable Nomination Form

(Note: 1 form for 1 policy. If you have 3 policies, you need 3 forms.)

Print out the Prudential Business Reply Envelope if you want to send by post. But before you do that, please take pictures of page 3 – 5 and let me verify before mailing.

Alternatively, pass it to me personally and I will submit to the company.

Step 2 – Read

Briefly read through the first 2 pages. Just take note that you don’t need to submit copies of ID of your beneficiaries.

Step 3 – Your Policy Particulars

Fill up page 3. The dates for page 4 & 5 must be the same, so fill in the dates last.

Step 4 – Nominees

Fill in page 5. Just a few points to take note:

  • This nomination is revocable, so you can change your nominees anytime
  • Living benefits will be paid to you, only death benefits will be paid to nominees
  • At the time of the death benefit, if a nominee is below 18, the payout will be paid to the parent or legal guardian

What happens when a Nominee dies before you?

  • If there’s only 1 nominee, the nomination will be revoked. That means no nomination done.
  • If there are 3 nominees (e.g. A 50%, B 25%, C 25%), and C dies before you, 2/3 of C will go to A, and 1/3 of C will go to B.

Advice on how to appoint nominees:

  • If you have children below 18, try not to appoint them as nominee. Then who should be the nominee? Close your eyes and think: If you pass away, who will be taking care of them?

Step 5 – Witnesses

Find 2 witnesses who are:

  • 21 & above
  • must not be a nominee or spouse of nominee

The purpose of the witnesses is to prove that you are mentally sound when doing your nomination.

It is best for me to tag along to explain their role as witnesses, to explain the importance of nomination. Just text me to inform me the date and time.

Step 6 – Submit

Ensure that all the dates on page 3 & 4 are the same.

If you wish to send by mail, print out the Prudential Business Reply Envelope. But before you do that, please take pictures of page 3 – 5 and let me verify before mailing.

You can also pass it to me personally.

That’s all! It’s very simple.

(MoneySense has published a guide on insurance nomination. Page 11 & 12 are more relevant as they touch on revocable nomination.)

Sample Copy (Please read & follow)