Nominations in Life Insurance and Family Takaful Contracts

The legal principles that are applicable to the issues of nominations and the payment of claims are regulated by the Financial Services Act (‘FSA’) 2013 and the Islamic Financial Services Act (‘IFSA’) 2013. These principles also apply to Personal Accident contracts. One of the more common issues when it comes to the payment of claims is whether the named nominee is entitled to keep the moneys paid out or whether they are under a duty to distribute to others. 

The following are some fundamental aspects of nominations and claims which all those involved in the industry are recommended to be familiar with:

1. If there is a valid death claim, the named nominee must be paid the full proceeds by the insurer or  operator.

2. The word ‘nominee’ is used when a policy owner buys a policy on his own life and appoints the named nominee to receive the death claim proceeds. Similarly, this principle applies to a participant in a takaful contract.

3. Insurance companies and takaful operators require the relationship between the policy owner and the nominee to be stated in the contract, but this is not a requirement by the FSA or IFSA.

4. Although it is routine for the Claims Departments to request for ‘proof of relationship’ between the policy owner and the nominee, a claim cannot be denied or withheld merely because the claimant cannot provide this ‘proof’.

5. Appointing a person as a nominee, has nothing to do with insurable interest, as the latter is a requirement only when a person buys an insurance or takaful contract on the life of another.

6. Payment of death claim proceeds to nominees must be noted as a ‘two-stage process’. 

     i) Firstly, it is for the insurer or operator to pay out the claim to the nominee.

    ii) Secondly, the nominee who receives the moneys or benefits may sometimes keep the             moneys for himself and in some situations the law imposes a duty on the nominee to              distribute them to others. 

7. If the nominee, upon receiving the death claim moneys has a right to keep the moneys for himself, he is deemed to be the ‘beneficiary’. This is seen in a life insurance trust policy or in the case of a conditional hibah in a takaful contract.

8. If the nominee has a duty by law to distribute the money to others, he is deemed to be the ‘executor’. This happens in circumstances when the nominee is one who is named in a ‘non-trust’ policy, whereby the moneys have to be distributed according to the instructions set out in a Will or as per the Distribution Act 1958. For Muslim participants of takaful contracts, the executor has to distribute the benefits in accordance with the Faraid rules.

My thoughts on Success and the Whole-Person Concept

Ideas and definition of success

When talking about success, one must look into the various aspects of our lives and this is summarised in the well-known principle of the “Whole Person” concept. An individual who chooses any one of these various aspects of our daily life and makes a decision to excel in it, is on the way to becoming a success. In this pursuit, one must always keep the other aspects of one’s life in perspective and balance. One cannot neglect or ignore any one of them. To cite an example, a man who earns a high level of income (financial) cannot be considered successful if in the process, he has to neglect his family or health (physical).

Principles to observe to achieve success

Although living a balanced life-style is very important, it is also necessary that we should have one single dominant goal at any one “period of time” in our lives. This goal must be more important than our other aspirations at “this” particular phase of our life. At a later period of our life and after having achieved the required level of success in our chosen goal, we may choose another goal which may be totally different from our earlier choice. A common example would be a young person who has just begun his working career, when the early years may be devoted to achieving his financial goals for himself and his family. Having reached a certain level of income, he may choose to further his studies (mental development). Having changed his dominant goals, he will have to put in more effort, time and energy to succeed in his studies at this stage of this life.

In the pursuit of our goals, we must be passionate about them. Human beings are motivated by emotions rather than logic. As a consequence, if we can harness our positive emotions and become passionate about our chosen goals, it will be far easier to achieve them. This principle is understood only by a few and should be taught and highlighted in self-help seminars and workshops. It is definitely a very important ingredient in the search of our own success.

Nominations & Claims - My Latest Book Is Now Available

Published in August 2018, this Handbook is a useful guide for all those involved in the Insurance & Takaful Industry. The book focuses on Schedule 10 of both the FSA and IFSA 2013 and and the information is presented in an "easy to understand" Q and A style. It is intended to be a guide to all and may be used as a training handbook for this subject.

The book is priced at RM 45.00 per copy. Please email for inquiries or to place your orders! 

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