Regardless of how much you earn, no one knows what the future holds. Considering the unpredictable nature of life, everyone needs to have a term plan.
A term insurance product secures the financial needs of your dependents. A lump sum is paid as compensation to the nominee in case of the inopportune demise of the policyholder. Buying a term plan is one of the most important financial decisions and can shield your family from financial burdens even after you are gone.
Who Can Be A Nominee In Term Insurance?
The policyholder decides the term insurance policy nominee. At the time of subscribing to online term insurance, the policyholder needs to incorporate the details of the nominee as well. The nominee can be anybody. The policyholder can nominate his or her mother, father, spouse, son or daughter. In some cases, the policyholder can nominate his or her relatives too. However, the policyholder needs to complete the required documentation to nominate distant relatives.
The policyholder can also choose to have multiple nominees so that the financial benefits can be shared amongst those nominated. The policyholder can also decide to split the financial benefits unequally by attributing percentage share to each nominee. Post the policyholder’s demise, the benefits would be shared as per the details mentioned in the policy. To avail these benefits, one needs to be aware of the insurance company’s policies. If a nominee is under 18 years of age, an appointee is provided who receives the amount.
Can We Change The Nominee In Term Insurance?
There is a provision to make changes in the nominee’s details. For example, if the term insurance policy nominee dies before the policy term, the filled-in nomination form should be submitted to the insurance company so that the nomination details can be effectively updated. If the details are not updated and the nominee dies during the policy term the following rules are applied:
The insurance company will send the claim amount to the Class I legal heir which are as follows.
- Insured’s spouse
- Insured’s son
- Insured’s father
- Insured’s mother
The insurance claim amount that one gets after the death of the policyholder, helps to avoid any financial burden. If there is a will provided by the policyholder, the following procedure is followed:
- The process 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 claim amount will be handed over by the insurance company.
- The insurance company may demand an indemnity bond, joint discharge statement or waiver of legal evidence.
The nomination facility gives the nominee the right to collect the death benefit. The nomination is the policyholder’s consent to receive the money. The policyholder may change the term insurance policy nominee as many times as he/she wishes to.
The nomination facility protects the interests of the insured as well as the insurer. The insurance company distributes the death benefit as per the information available in the nomination form.