A term life insurance product secures the financial needs of your dependents. It protects you and your family members. In case of the unfortunate demise of the policyholder, a lump sum is paid as compensation to the nominee.
The lump sum, known as the sum assured, is a pre-determined amount. Hence, it is mandatory to mention the nominee in your proposal form. If you are purchasing an insurance policy with a death benefit, you should include the nominee without fail.
The policyholder decides the nominee. When you subscribe to an online term insurance, you must include the details of the nominee as well. The nominee may be a family member. Your mother, father, wife/husband, son or daughter can be included as a nominee. In some cases, the term policy relatives such as a nephew, uncle and aunt. However, the policyholder should fulfill the necessary documentation to include distant relatives. It is very important to prove the insurance interest if you choose a distant relative or friend. If you fail to establish this satisfactorily, the company may reject your application.
Your premium is decided on age at which you buy the policy and remains same, throughout your life
Premiums can increase between 4-8% each year after your Birthday
Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease
Through the nomination facility, the policyholder will appoint a nominee or nominees to receive the death benefit while processing a death claim. The sum assured plus the applicable bonuses will be paid along with the death claim.
The following details of the nominee should be submitted to the insurance company:
Official documents pertaining to the above details should be submitted to the insurance company.
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 so that the option can be exercised 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.
The policyholder has the provision to make changes in the nominee’s details. S/He can even change the nominee during the policy term. S/He 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 so that the nomination details can be efficiently updated.
The policyholder should get a written acknowledgement from the insurance company to avoid any discrepancy 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.
If the nomination details are not provided by the policyholder or the nominee 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:
If the policyholder leaves a will, the following procedure is followed:
The following errors or mistakes are committed by policyholder, that can create trouble while processing and paying the death benefit to the nominee:
The nomination facility gives the nominee the right to collect the death benefit. The nomination is the authorization to receive the money and this authorization is provided by the policyholder. The nomination can be cancelled 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.
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