Consumer Alerts - February 2007:

Buying insurance: Beneficiary’s consent needed to make changes (Published in C@sebites Issue 97, 13 February 2007)

If you buy an insurance policy and name someone as beneficiary, what happens when you need to make changes to the policy or change the beneficiary? Since you’ve been paying the premiums, you ought to be able to make the changes, right? But it’s not as straightforward as it seems, as one consumer found out.

A writer wrote into the ST Forum (Snag in bid to change beneficiary’s name in insurance policy, ST Forum, 1 Feb) recounting her experience. She had bought an insurance policy and named her husband as the beneficiary. After they divorced, she wanted to change the beneficiary for the policy and realised that she needed to obtain her ex-husband’s consent in order to do so.

Even though it may not be stated in the insurance policy, nomination of beneficiaries is covered under Section 73 of the Conveyancing and Law of Property Act. When a policyholder nominates his or her spouse and/or children as beneficiaries to the proceeds of his/her insurance policy, a statutory trust is automatically created in favour of the beneficiaries. The statutory trust cannot be unwound without the consent of all the beneficiaries.  

So before you name someone as a beneficiary, be fully aware that should you need to change the beneficiary in future, you will need to obtain the original party’s consent.