What is an insurance nomination and why do I need one in Singapore?

CPF Nomination Rules and Importance

A CPF nomination is a formal instruction specifying who should receive your CPF savings (Ordinary Account (OA), Special Account (SA), and Retirement Account (RA)) upon your demise. It is crucial because CPF Nomination overrides everything else, including a Will or Trust (CPF Board). This means a valid CPF nomination dictates the distribution of your CPF funds, regardless of what your Will states.

What CPF Nomination Covers and Excludes

CPF nominations cover the balances in your OA, SA, and RA. However, there are specific assets that are NOT covered by a CPF nomination and must be handled via a Will or direct nomination with the provider:

• CPF Investments Scheme (CPFIS) funds: These should be included in your Will.
• CPF LIFE/Retirement Sum Topping-Up Scheme (RSTU) monies: These are handled by the CPF nomination.
• Direct Nomination Scheme (DPS) with an insurer (e.g., for an Integrated Shield Plan rider): You must nominate directly with the insurance company.
• Properties bought using CPF: These are distributed according to your Will or intestacy laws.

Practical Considerations for Singaporeans

• Flexibility: You can nominate up to 100 beneficiaries, including foreigners and organizations.
• Revocation and Updates: A CPF nomination is automatically revoked upon marriage. It is NOT automatically revoked upon divorce, so you must manually update it if you wish to change beneficiaries after separation.
• The 99:1 Tip: To ensure your wishes are followed even if your primary nominee predeceases you, always name a backup nominee (e.g., 99% to spouse, 1% to a sibling). If the primary nominee dies, the backup receives the entire amount, preventing the funds from being distributed according to the intestacy laws (CPF Board).

While your CPF savings grow at a guaranteed rate (e.g., 4% on SA/RA balances, or 2.5% on OA), the nomination ensures this wealth bypasses probate and reaches your chosen loved ones quickly.