Life Insurance Policy Assignment

The term Insurance Assignment refers to the transfer of ownership from the Policy Owner (Assignor) to another person (or institution aka Assignee). The Assignee will now have control of the insurance policy and act as the Policy Owner. There is no change to the life assured in the policy, and the policy will remain unaltered.

There are two types of assignments:

· Absolute Assignment: Complete rights and ownership of the policy transferred to the Assignee.

· Conditional Assignment: Rights and ownership of the policy under certain conditions to the Assignee. For example, as collateral for a loan for a term of 30 years.

Absolute Assignment

· Overview: Legally transfers ownership of a policy to another party.

· Revocation: Cannot be revoked. But a willing Assignee can reassign or revoke the assignment.

· Muslim-specific: A Muslim policy owner can fully assign the policy to anyone (Muslim/non-Muslim) as the beneficiary.

Conditional Assignment

· Overview: No legal transfer of ownership of a policy but assignee’s consent required for any contractual changes.

· Revocation: Cannot be revoked. But a willing Assignee can reassign or revoke the assignment.

· Muslim-specific: Conditional assignment is not applicable for Muslims.

Why an Insurance Assignment?

· Gift or voluntary transfer.

· For scenarios where a Muslim wants to ensure a life insurance claim goes to a non-Muslim (and vice versa).

· Settlement, transferring the policy to trustees to give effect to successive or contingent interests.

· Transfer to existing trustees of a settlement or to beneficiaries in pursuance of the trusts.

· Mortgage, transfer of mortgage, or reassignment on repayment.

· Assignment to a trustee for the benefit of creditors.

· As a keyman business insurance policy to ensure the company or person receives the money for business continuity upon passing of the life assured.

· For tax purposes.

How do you perform an Assignment?

· Here are the general guidelines but do confirm this with your insurance company or agent.

· Both parties (assignor and assignee) must be present at the customer service counter (w.e.f. March 1, 2017).

· It is recommended that you call to arrange an appointment before coming.

· The staff present will explain in detail on assignment (absolute/conditional) and policy benefits prior to signing the forms.

· Assignor has to revoke the existing nominee(s), if any.

· Client has to prepare RM10 hasil stamp (purchased themselves beforehand at a post office) for assignment contract stamping purposes, and pay a small (RM2) processing fee.

Assignment to a company

Documents required for assignment to a company are as follows:

· Certificate of Incorporation (Public Company/Private Company).

· Return of allotment of shares.

· Particulars such as register of directors, managers, secretaries and changes of particulars.

· Authorisation letter from the company or resolution from Board of Directors for the appointed Authorised Person.

· Copy of NRIC / Passport of Authorised Person.

FAQ

Q: What is the difference between an assignee and a nominee?

A: The key difference is an assignee is the (full/conditional) owner of a life insurance policy, while a nominee will only receive the benefits upon a claim i.e. death claim.

Q: What if both an assignee and nominee contest a claim?

A: The assignee has priority over the claim of a nominee.

Q: Can an assignee who is bedridden or disabled make an assignment?

A: Yes, with the attending doctor’s confirmation that the assigned is of sound mind.

This article first appeared in https://mypf.my