Appointing A Nominee in Life Insurance policy

Intro: Safeguard the interests of your dependents by appointing a nominee to your policy.

A life insurance policy secures the financial interests of your dependents in case of an untimely demise. To ensure that the bereaved dependents can easily receive the death benefits, life insurance companies have made certain provisions. ‘Nomination’ is one such provision.

Understanding Nomination

As a life insurance policyholder, you have the right to make a ‘nomination’. This involves appointing a nominee. A nominee is the person designated to receive benefits under a life insurance policy in the event of death of the policyholder. The nominee thus performs the role of a ‘trustee’ for the legal heirs of the policyholder.

Benefit Of Nomination

By making a nomination, you safeguard the interests of your dependents. Even though in the absence of nomination, your legal heirs are entitled to the benefits receivable under a life insurance policy, they would have to undertake time-consuming hassles of submitting a succession certificate or a will in order seek their claim. Nomination removes this time-consuming process. With nomination, the heirs do not face such procedural difficulties, which could delay the receipt of their claim.

Undertaking a nominee

Though nomination can be undertaken any time during the policy term, ideally, it should be undertaken at the time of policy purchase. As a policyholder, you need to mention the full name, address and age of the nominee. You are also required to state your relationship with the nominee. Also, you have the right to make multiple or successive nominations and change nominations any number of times during the policy term.

Important Points To Note

Inform your nominee about the nomination details and the whereabouts of the policy documents.

Nominees do not have absolute rights. Your legal heirs can sue the nominee.

The transfer or assignment of the policy automatically cancels the nomination.

In case you have more than one heir, there could be a dispute on the percentage of benefits receivable by the different heirs. To avoid this, you should mention the entitlement of each heir in the nomination section of the policy.
Your written will takes precedence over the nomination.