Life is full of surprises. It is said that Death is certain but the timing of death is uncertain. Hence it is important that we use nomination as a mandatory process for all assets created by us. Nomination in insurance is an important part of the proposal form of the policy and you must nominate after all considerations.
No one knows what will happen in the next second. Despite our efforts, an unfortunate event might occur. For such an unfortunate event, we buy a life insurance policy so that we can financially secure the lives of our loved ones. But what if a nominee is not appointed? There can be disputes for the claim money among our loved ones. Claim money can be either given through nomination or legal succession. Legal succession is a lengthy and expensive process.
Lets us know more about a nominee in the life insurance policy.
What is a nomination?
Nomination is a process that comes into effect after death. Prior to death, the insured has all the power to change the nominee. In life insurance, the nomination is the process of authorizing a person as a nominee to receive the sum assured at the time of the insured’s death. So in case of the demise of the insured, the life insurance company pays the death claim to the nominee.
Is there a difference between a nominee and a beneficiary nominee?
Earlier, a nominee was only a custodian of claim money and not the beneficiary but since 2015, life insurers treat the nominee as a beneficiary nominee.
Who can be a nominee?
In life insurance, the following are eligible to be a nominee:
- Legal heir: A legal heir is a person who is legally entitled to get the deceased person’s inheritance. A legal heir can be the insured’s children or spouse.
- Immediate family members: Immediate family members are parents, siblings, parents-in-law, etc.
- Any other person: Cousins, friends, or any other person who the insured wants to nominate can be a nominee. In such cases, the insured must mention the word as beneficiary nominee and can give a reason why the nomination is being done to a member outside the family. Now, the beneficiary nominee can be done for society and charitable institutions.
Can a minor be a nominee?
Yes, a minor (a person who is under the age of 18) can be a nominee. However, the insured is required to assign an appointee and provide the details of the appointee to the insurance company.
Can there be more than one nominee?
Yes, there can be multiple nominees. Insured can mention the portion of death benefit that each nominee must receive.
Is it allowed to change nominees?
Yes, an insured is free to change the nominee during the policy tenure. He can change it as many times as he wants to as only the last nomination will be considered at the time of death claim. To change the nominees, you need to send a notice to the insurer for a change and get an acknowledgment from the insurer to confirm it.
What if the nominee dies?
If a nominee of a life insurance policy dies before the policy term ends, then the insured is required to submit a new nomination. If the nominee dies prior to claim settlement then Succession Law would apply.
Go ahead and nominate someone to be your insurance policy’s nominee.
If you face any problem related to insurance, you can contact Insurance Samadhan. We have helped 14,500+ people in resolving complaints related to insurance. Contact us to get samadhan for your insurance-related issues. We are always available to help you out.