Who Should Be Your Nominee for Your Term Insurance?

Nominee particulars

The following details of the nominee should be submitted to the insurance company:

• Name
• Age
• Address
• Relationship between the policyholder and the nominee

Official documents about the above details should be submitted to the insurance company.

Multiple nominations

You can opt for multiple nominees so that the nominees will share the financial benefit equally. It is also possible to share the benefit as per the percentage chosen by the policyholder. You should be aware of the insurance company's policies to exercise the option as per your needs.

If the nominee's age is less than 18 years, the policyholder should provide an appointee. A minor is not eligible to receive the amount, and it should be paid to the appointee as declared by the policyholder.

Change in nominee

The policyholder has the provision to make changes in the nominee's details. She/He can even change the nominee during the policy term. The person can obtain the nomination form from the insurance company either online or offline. The filled-in nomination form should be submitted to the insurance company to update the nomination details efficiently.

The policyholder should get a written acknowledgment from the insurance company to avoid discrepancies when processing the claims. When the nominee name is updated, the latest particulars will override the previous information. There is no restriction on changing the nominee during the policy term.

If the nominee dies before the policy term, the change of nominee should be fulfilled by the policyholder. It is the policyholder's responsibility to update the nominee's particulars as per the changes in the status of the nominee.

No nomination found

If the policyholder or the nominee does not provide the nomination details dies during the policy term, and the nominee's details are not updated with the insurance company, the following rules are applied:

The insurance company will dispatch the claim amount to the Class I legal heir. The following persons are described as Class I legal heirs:

• Insured's spouse
• Insured's son
• Insured's father
• Insured's mother

If the policyholder leaves a will, the following procedure is followed:

• The process is as per the Indian Succession Act, 1925.
• The claim amount is distributed as per the terms of the will.
• The court issues the succession certificate, and based on the court's decision, the insurance company will hand over the claim amount.
• The insurance company may demand an indemnity bond, joint discharge statement, or waiver of legal evidence.

Nomination oversight

The policyholder commits the following errors or mistakes that can create trouble while processing and paying the death benefit to the nominee:

• A nominee not informed – The nominee should know about the insurance policy. The policyholder should notify the nominee of the policy and share the policy documents with him/her. If the nominee is unaware, he will fail to submit the insurance claim to the insurance company. Even if the insurance company tries to identify the nominee based on the details provided, it is unwise for the policyholder not to inform the nominee about the insurance policy on his/her name.
• Details not updated – The policyholder fails to update the nominee's details. The address and other information of the nominee should be updated periodically. If the nominee dies during the term, the change in nominee should be updated immediately. The policyholder can change the nominee at any time, and there are no restrictions on the number of changes.
• Minor nominee – The policyholder appoints a minor nominee (nominee's age is less than 18 years) and fails to provide the information of the appointee. If the policyholder must appoint a minor as his/her nominee, he/she should take steps to select an appointee. The policyholder should provide complete and verified details of the appointee. If the policyholder fails to provide the required information about the appointee, the minor will not get the financial benefit. The appointee receives the financial benefit until the minor attains 18 years of age.
• Appointment of one nominee – The policyholder fails to provide more than one nominee in the nomination forms. If an unfortunate event befalls the nominee and the policyholder fails to update the nomination form, the claim processing and transferring the death benefit will hit a roadblock. The insurance company will then continue by identifying the legal heir and completing the necessary legal formalities. These unnecessary hassles can be avoided by choosing more than one nominee. The allocation percentage should be mentioned in the nomination form so that the claim will be processed quickly and the death benefit will be distributed as per the ratio.
• Not aware of nominee's rights - Nominees assume that they have absolute ownership on the death claim. If there is a difference between the nominee details and the person mentioned in the will, the will takes higher precedence. If the policyholder wants to provide the nominee's absolute rights, a choice should be prepared, and the nominee should be included in the will.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply.

Nomination vs. assignment

The nomination facility gives the nominee the right to collect the death benefit. The nomination is the authorization to receive the money, and the policyholder provides this authorization. The nomination can be canceled or changed as many times as per the needs of the policyholder.

The right of the policyholder can also be passed on to an assignee. The assignment of the policy can be done on the policy or through a separate deed. If you assign a policy, it cannot be revoked again.

A Final Word

The nomination facility protects the interests of the insured as well as the insurer. The insurance company will deliver the death benefit as per the information presented in the nomination form. If there is a change in the nominee's particulars, such as name and address, the details should be updated immediately.