Life Insurance: Things to Know About Nomination or Beneficial Nominee

Jul 04, 2018 | 10 months ago | Read Time: 3 minutes | By iKnowledge Team

Getting a life cover that suits your family is a good move, but it is equally essential for you to name a nominee. You must also disclose your policy details to your spouse or nominee, so that the documents are handy for them during an emergency, and not left clueless.

Another reason, why it’s important to have a nominee in your insurance plan is to make sure the claim settlement process is smooth, without any legal battles.

That’s why, we have created a checklist for you of things you need to know about nomination for a life insurance policy:

1. A nominee is just the receiver

A nominee can receive the money but can’t use the money unless he or she is a legal heir. They need to eventually hand over the money to legal heirs. Unless he or she is a legal heir, they aren’t entitled to maturity benefits. Upon the policyholder’s demise, benefits are payable to the registered nominee(s) or legal representatives of the policyholder or those directed by a court of competent jurisdiction in India.

2. A beneficial nominee can use the claim money

If you have named someone a beneficial nominee while signing the policy documents, they are entitled to the claim settlement money. Even those who become beneficial nominees automatically (parents, spouse or children) are entitled to the maturity benefits. A beneficial nominee is the end consumer of money received under insurance policy claim. So, if you have made someone a beneficial nominee, they can use the maturity benefits.

3. A nominee can be a minor

In case the nominee is a minor (below 18 years of age), you can appoint/designate even a minor to receive the money in case of your unfortunate demise. During this time, the nominee will have a minority status, and after he/she reaches 18 years, the sum assured will be handed over.

4. Nominations can be altered/cancelled

You can also alter or cancel nominations during the policy’s term. This comes handy in case of a divorce or separation, when you wish to add or change the name of your nominee.

5. If the nominee passes away

  1. If the nominee passes away after the policyholder, but before his share is paid, the expired nominee’s share will be paid to the legal heirs.
  2. Suppose the nominee dies before the policyholder, the maturity proceeds will be paid to the legal heirs or legal representatives or the holder of succession certificate.

6. If there is no nominee

In the absence of a nominee, legal representatives of the policyholder or legal heirs will be paid the benefits of the policy. That’s why, it is always important to nominate your beneficiary so there is no legal hassle for your next kin.

7. If policyholder nominates

If the policyholder whose life is insured nominates: parents, spouse, children, spouse, and children or any of the above, they are beneficially entitled to the sum assured payable by the insurer. In case the policyholder has not granted the beneficial title to the nominee(s) they will not be considered as beneficial nominees.

8. Documents needed for processing claims

  1. Original policy document.
  2. The death certificate of the life assured issued by the local municipal authority.
  3. Documents required by the company to process claims based on the cause of death.
  4. Cancelled cheque to process payment.

When you sign up for a policy, ensure you name a nominee, as it may make it difficult for your dependents to receive the maturity proceeds later. Also, make sure to buy your life insurance policy from a reputed company such as Aegon Life, so that the policy processes are clear in the beginning. You can also buy a term insurance plan like iTerm Plus online, and nominate your loved ones for the same.

Go on, get insured today!

Advt. no.: IA/Jun 2018/4113


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