Getting a term insurance plan is a good move to secure your family against policyholder’s death, but it is equally important to name a nominee in its proposal form. This is because the nominee gets the lump sum amount as compensation in case of unfortunate demise of the insured. The lump sum amount is also known as sum assured and is pre-defined. Moreover, if you are buying an insurance plan with death benefits, then you should not forget to mention nominee in it.
Who is a Nominee?
It is the policyholder who decides the nominee while filling the insurance/proposal form. A nominee can be policyholder’s wife/spouse, mother, father, son, daughter, or other family members. If you want to nominate some of your relatives like the uncle, aunt, nephew, etc. in your policy, you can do that as well. However, in that case, you should provide all the required documents. Therefore, to include any distant relative as a nominee in your term insurance plan, it is required to provide the insurance interest, and if you fail to do that, the insurance company may reject your form or application.
Some Facts and Information Related to Nominee
The nominee is the person who can avail the financial benefits for which the policyholder has paid throughout his/her life. Some of the facts related to the nomination facility of the term insurance are:
Even a minor can be the nominee: A minor (anyone below the age of 18 years) can also be the nominee of a term plan, but in this case, you have to assign an appointee. An appointee gets the sum assured in case of demise of the insured. The sum assured will be transferred to the nominee only after he/she reaches the age of 18 years.
One with the status of beneficial nominee can use the claim money: At the time of filing and signing the policy documents, if you have made someone beneficial nominee, then that person is entitled to claim the settlement money. Moreover, the beneficial nominees are automatically entitled to the benefits of maturity.
Cancellation of the nominee: A policyholder can easily cancel the nominee or change the name under the nominee section during the policy tenure for any number of times.
Multiple nominees: In your term insurance plan, you can nominate more than one people. You can also choose the percentage of share among these nominees. However, for the same, you should know all the rules of your insurance provider.
Change in a nominee: Some best term insurance plan gives you the facility to make changes in the details of the nominee for any number of times during the policy term. You can get the nomination form from your insurance provider either offline or online. After filling this form precisely, you should submit it to your insurance provider for nominee update. The insurance company gives the written acknowledgment for the same. Most of the times, the requirement of a change in nominee occurs, if the nominee dies before the end of the policy term.
If no nominee is found: If you forget to provide the details of nominee or if the nominee dies during the term of the policy but his/her details are not updated in the policy details, then the following rules are applied:
- In this case, your insurance provider gives the claim amount to the Class 1 legal heir. The list of Class 1 legal heir is:
The spouse of the policyholder
The son of the policyholder
The father of the policyholder
The mother of the policyholder
If the insured leaves a will, then the below procedure is followed:
The process is followed as per the Indian Succession Act, 1925.The claim amount is given as per will’s term.
The succession certificate is issued by the court and it will be according to the decision of the court; the amount of claim is handed over by the insurance provider.
Some insurance companies ask for indemnity bond, waiver of the legal evidence, or joint discharge statement.
Required Documents for Processing the Claim: The following list of documents is required for processing a claim in term insurance:
- Original document of the policy
- The death certificate of the policyholder issued by the local municipal corporation authority.
- Documents needed by the insurance provider for processing the claim as per the cause of the death.
Summing it Up!
The nomination facility is there to protect your interest and interest of the insurance company. The insurance company gives the death benefits as per the information is given in the nomination form. Therefore, if there are any changes in the details of the nominee(s), such as the name of the nominee, address, etc. then they should be updated immediately.