Beneficiary of life insurance policy vs. a will

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asked on May 18, 2000 at 23:36
by   Corina L
edited on Mar 30, 2016 at 05:02
I am the only person looking after an old aunt who is unmarried. I want to get a life insurance policy on my life. However, I wish to put my aunt as the beneficiary in the policy. If anything happens to me, will my husband be able to claim the proceeds of the policy rather than my aunt?
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answered on May 20, 2000 at 14:37
by   insadmin
If you contract with the insurance company that you want the proceeds paid out to your aunt, in the event that anything happens to you, the insurance company is bound to follow your wishes. The insurance policy is a contract between yourself and the insurance company. As you have specifically stated therein that the beneficiary is to be your aunt, your husband does not have a claim to that life policy proceeds, while he may be the lawful beneficiary of the rest of your estate.
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answered on May 17, 2002 at 00:13
by   Anthony
Do be careful here because there's a new Insurance Act passed in 1996.

In this law, if the nominee(s) to your policy is your spouse or/and child or/and parents (for parents, at the date of the nomination, there is no spouse or child) then the nominee will get the money absolutely because there is a trust created. Check out section 166 of the Insurance Act 1996. It will explain further.

Whereas, if you nominate other persons, other than the above person(s), for e.g. your aunt, then she will receive it as an executor of the policy and is duty bound to pass it to your estate. In this case your estate means all the assets under your name that your beneficiaries can claim. This is stated under section 167 Insurance Act 1996.

Your beneficiaries, if you have a Will, will be those persons that you name in the Will. If you don't have a Will, then your estate will be distributed according to the Distribution Act 1958 as amended in 1997 and the beneficiaries are are your spouse, children and parents. So, your husband will be able to get the money because your aunt is duty bound to pass it to your estate as she is the executor.

To solve this problem, locate your aunt and do an absolute assignment with the insurance company. This will secure her position and she will get the money. There is a problem. If after finalising the assignment to your aunt and you change your mind deciding that you do not want to give it to her, you need her permission for the assignment to be revoked.

Suggest you do a trust for the insurance money with a trust corporation and a Will for the rest of your assets. There are a few good trust corporations. To name a few, Hong Kong Bank Trustee Bhd, BHLB Trustee Bhd. For the Will, you could check out Rockwills Corporation Sdn Bhd.
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answered on May 17, 2002 at 00:16
by   Anthony
In my earlier messages the statute referred to are those in Malaysia.
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answered on Dec 15, 2003 at 16:41
by   Cheng
edited Mar 30, 2016 at 05:09
I wonder if I can still claim my insurance upon maturity as now I am declared a bankrupt. Upon maturity it is worth about RM300k. And I am also worried about my EPF next year when I turn 55 of age - RM250k approximately.

I have a question on behalf of a friend here: Both wife and husband went overseas to work and paying their sons insurance premium (since birth) and the sons are now 16 years of age who are also studying overseas. When there is a accident (say in Melbourne) how do they claim? And how do they claim the amount when it becomes matured in 2 years time?
Anyone can help to clarify this?
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answered on Jan 3, 2004 at 14:02
by   Vince
EPF and Insurance, both have regulated their own Rules & Regulations and Policy Act, approved by the Government to protect the Privacy, Personal Benefits and Interest of their repective Customers or Contributors.

Nobody can touch your HARD-EARNED Money, which could also mean LIFE or DEATH.

Check the Insurance Policy to see whether it covers residing (not travelling) overseas (outside Malaysia). Insurance claim procedures are mostly standized, just fill their required Forms.
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answered on Apr 5, 2004 at 01:25
by   Unni
Corina L, whilst there is merit in the other arguments and suggestions in response to your question, you may still validly name your aunt as a beneficiary under your will. A will does not restrict distribution of the residue of your estate to your immediate family which is your spouse and children. it could include anyone and everyone you chose to nominate including charities.

If the insurance act defeats your intentions, you are best served by a well drafted will which will amongst other things place the proceeds of your insurance policy in the hands of a trustee who is duty bound to give effect to your wishes after your death.

There are numerous situations such as yours where the fear is that your wishes will not be carried out or that your rights to dispose of your personal property after death is subject to restrictive laws and conditions. Thats really not an accurate reflection of how the law works.

First and foremost, you should get a proper will drafted. Even if it is a mirror will whereby you name your husbahd beneficiary and executor or trustee in the vent you pre decease him and vice versa, your husband nor any other member of the family or other party who will either be a beneficiary or is likely to influence your decision should be present. Your lawyer should be acutely aware of this adn have the gall to ask others to excuse themselves when taking instructions from you. Thats the law!!

So go ahead and draft a will. 'It speaks from the grave' as the old adage goes. Your aunt will be cared for. Whats also important is that your debts and liabilities are paid up or that you ensure there are sufficient funds to cater for these as well. Not your husbands or other family members debts. Yours.

Hope this has helped.
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answered on Apr 5, 2004 at 01:38
by   Unni
Cheng. In respect of your query remember this. When you are delcared bankrupt, you are placed in that situaiton for a period of time as decided by the relevant legislation and by the courts. So first question is when does your bankruptcy expire or end?

When you were declared bankrupt were these assets sequestered? The fact that you are bankrupted means that all of your previous or pre bankruptcy debts and claims are extinguished. If you wish to exit your state of bankruptcy earlier then you may through a third party to your trustee in bankruptcy attempt a creditors meeting to make an offer to them to release you from your bankruptcy. This is usually looked upon more favourably than wiating for your bankruptcy to expire then to re make a life for yourself.

Banks and other organization who offer credit usually tend to view this aas a positive act. A creditors meeting may be in the form of offering to repay your crediots say 10 cents for every dollar owed. The larger ones may find merit in receiving $30,000 out of $300,000 than receiving $000000. This is business and sensible business practice.

If these assets have not been sequestered and used to pay off your creditors then it is unlikely they will have any right at the end of your bankruptcy to pursue you for anything. In fact if they have ailed to take possesison of these assets because of legislative provisions protecting these class of assets, then these are yours to keep.

Wise practice is for you to appoint a trustee of these assets who will take control of them when they fall due and deal with them in a practical and lawful way. Worth talking toa lawyer who specialises in estate planning.

Relax, there are many ways out of such problems. Hope you retire in prosperity and worry free.

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answered on Jan 17, 2006 at 21:40
by   InsuWong
edited Mar 30, 2016 at 05:33

Please put it in a layman's term in describing or doing your explanations. Most of these people who are in this forum are individuals not a company or Berhad organisations. An individual bankruptcy is not something where one will be free from being bankruptcy after 5 years in Malaysia. Here is forever, so long as you live. So these individual person's creditor is the bank! What is 'call for a creditors meeting' and what 'offer 10 cent per RM10k owe'? People don't understand all these, my friend, Vince.

Remember, it's a individual person!

These people (bankrupt person) just want to know how the insurance company pay them when they are bankrupt - NO BANK ACCOUNT, NO PASSPORT, NO RIGHTS TO SIGN DOCUMENTS etc etc.

I think the AO will say come on let me do the claims for you. So the AO takes over and 'sliced' the whole NICE piece of the awarded nice lamb (insurance claimed money) to the bank first, then the balance(if any) back to you. Maybe is not even sufficient for the bank (interest).

So my advice for those who are already bankrupt: STOP putting in your money to the insurance policy monthly or yearly or whatever way - quarterly etc. and discover yourself one day with all these problem as describe above.

Yeah one can say get a lawyer. You know when you pay in you don't need one but why you should when you re-draw your money when matured or accident happened.

Am I talking facts? Like to hear from you all soon. Please reply.
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answered on Jan 18, 2006 at 13:32
by   kong
It's a pleasure and very informative to read posting by people like Anthony and Unni. Well done. That's what this forum is all about. Armed with some basic knowledge, we can then proceed to go to lawyer, trustee etc to set things up. Thanks.
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answered on Feb 18, 2006 at 23:14
by   Unni
Insurewrong, what have you been smoking calling us Vince? better take out a policy for yourself and have a will drafted soon before you completely lose your marbles.
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