Does a will cover my life insurance payouts in Singapore?

Life Insurance Payouts and CPF Nomination Rules

A will does not cover the payout of life insurance policies in Singapore if a CPF nomination is in place. According to CPF Nomination Rule #2, CPF nominations override both a Will and a Trust regarding CPF monies. Similarly, for life insurance policies, if you have made a nomination under the Insurance (Nomination and Benefits) Act, that nomination takes precedence over your Will.

CPF Nomination vs. Insurance Nomination

It is crucial to distinguish between CPF nominations and insurance nominations. While both override a Will, they apply to different assets:

• CPF Monies: Covered by a CPF Nomination. These funds are distributed according to CPF Board rules and the nominee(s) listed with the Board.
• Life Insurance Payouts: Covered by a nomination made directly with the insurance company under the Insurance Act. This nomination dictates who receives the policy proceeds.

What Your Will Does Cover

Your Will is essential for assets not covered by specific nominations. For CPF-related matters, your Will covers:

• CPF Investment Scheme (CPFIS) monies: Any investments made under the CPFIS must be included in your Will if you wish to dictate their distribution (CPF Nomination Rule #2).
• Properties bought using CPF: The distribution of these assets follows your Will or intestacy laws.

Practical Implications

To ensure your life insurance proceeds go to your intended beneficiary, you must have a valid nomination made directly with the insurer. If you have no nomination for your life insurance policy, the payout will be distributed according to the Trusts (Prevention of Corruption) Act or the Distribution Act 1958 (if you are not Muslim), which may differ from what your Will specifies.

CPF Nomination Tip

Remember CPF Nomination Rule #4: Always have a backup nominee. If your primary life insurance nominee dies, the proceeds will not automatically revert to your Will; they will be distributed according to the law unless you have a secondary nominee listed with the insurer.