When you buy a life insurance policy, you do so with the objective of providing the best financial assistance to your loved ones in your absence. While there are different types of life insurance plans available in the market, term insurance is one of the most popular options and can provide a suitable life cover to your family. When purchasing your policy, the insurer requires you to nominate someone for the policy. Who exactly is a nominee? Who can you nominate in your policy? What are the things you need to keep in mind about nominees? Read on to know more about this.
What is term insurance?
Term insurance is a type of life insurance policy in which the insurer agrees to compensate the family of the insured. This compensation is given in the event of the policyholder’s sudden demise during the policy term. This amount will help them manage necessary expenses while planning a financially secure future for themselves. The amount your family would receive is dependent on the type of plan you purchase. Do keep in mind that a higher sum assured means a higher term insurance premium.
Who is a nominee?
A nominee is a person who is related to the policyholder. One of the pre-requisites during the purchase of your policy is to nominate a person as a nominee. A nominee could be either a child, partner, or either of the parents of the policyholder. If there is another relative, close or distant, who is financially dependent on the policyholder, they can also be nominated by the policyholder. Here is life insurance quote for couples.
What role does a nominee play?
When the policyholder passes away during the policy term, a claim has to be filed in order to get compensation from the policyholder. The responsibility of filing the claim falls on the nominee. If the validity of the nominee is recognised by the insurer, their claim will get processed and compensation will be given to them. However, if someone claims to be a nominee, but they are not recognised by the insurer, their claim will be instantly rejected.
What are the types of nominees?
The following are the types of nominees in this insurance policy:
- Minor nominee
As the term suggests, this type of nominee is one who is under the legal age of 18 years. As a policyholder, you can nominate a minor as a nominee. However, when you nominate a minor, you are also required to nominate a guardian who will look over the nominee till they reach the legal age. Moreover, if you were to pass away while the nominee is still a minor, the guardian can claim the compensation amount on behalf of the nominee.
- Beneficial nominee
This type of nominee is someone who is immediately related to the policyholder. This includes either of the parents, partner, or child of the policyholder. If the policyholder passes away during the policy term, only the beneficial nominee can file a claim and get the compensation amount from the insurer.
- Changing nominee
If at any point of time during the policy term, you wish to change your current nominee to another one, the latter one is known as a changing nominee. For example, if you have nominated your mother as the nominee and wish to change it to your child, you can do so. Do keep in mind that you will have to -go through the process of paperwork once again in order to change the nominee.
Things to keep in mind about nominees
Given below is a list of things you should be aware of:
- As the whole point of the insurance is to provide financial assistance to the family of the policyholder, make sure you nominate someone who will be capable enough of handling all the legal paperwork related to the claim process.
- You have the provision of appointing more than one nominee. Multiple nominees can be helpful in the event that one nominee were to pass away during the policy term.
- If you are appointing a single nominee, make sure that their details are updated with the insurer.
- Do not forget to appoint a guardian if the nominee is a minor in order to avoid legal hassles in the future.
- When appointing a nominee, make sure that all the correct information about them is provided. This would lead to fewer complications during the claim process.
If you wish to purchase a policy for your family, make sure to use the online term insurance calculator to see which plan would be suitable and its cost based on your requirement.