- Process to change nominee
- Eligibility criteria of nominee
- Key guidelines for nominee
How to Change the Nominee in Term Insurance?
Term Insurance is an ideal way to protect your family financially from the unfortunate event of demise. Even if you’re not around, you can make sure to fulfill your family’s needs through death coverage.
Do you wish to know whether you can change the nominee in term insurance? Yes, Insurance companies allow policyholders to update their policy’s nominee. Generally, while buying term insurance, policyholders prefer to take out a policy for a specific period, for instance, 10, 20, or 30 years.
However, in a long-term investment, you may find yourself in circumstances where you want to change your nominee. In that case, you may have to understand how to change the nominee in term insurance.
What is the process to Change the Nominee in Term Insurance?
Switching up your nominee in term insurance is not quantum physics, as many policyholders assume. It is quite a simple process and requires following a few steps to ensure a hassle-free nominee change process.
Keep reading the steps mentioned below to change your policy’s nominee in term insurance-
- Reach out to your insurer to visit their official website for the specific process and form required for switching up the nominee.
- Fill out the necessary details in the form for nominee change, available online or in person, from the insurer. It may include your policy, existing nominee, and new nominee details.
- After that, you might have to submit supporting documents, such as the relationship proof between the policyholder and the nominated person and the policy contract (for endorsement).
- Once you’ve filled out the form, you can submit it in person by visiting their office or uploading it through their online portal.
- The insurance company will review the form and may contact you for further clarification. However, you’re responsible for explaining your relationship with the new nominee to the insurer.
- Once the documents are verified and approved, the insurer will update the new nominee records.
- Even policyholders will receive a confirmation mail with the updated document on their registered email ID.
(Please note that steps and required documents may vary depending on the insurance company)
Who can be a Nominee in Term Insurance?
Well, you’re free to select anyone as your insurance nominee. It can be your family member, a close friend, or even someone outside your family. However, term insurance is a tool to save your loved ones from the financial burden in the event of your sudden demise. Since the nominated person will get the sum assured in your absence, it may advise you to select your policy’s nominee carefully.
What are the Types of Nominees in Term Insurance?
In terms of insurance, there are different types of nominees that you can designate to receive the death benefit in case of your demise. The availability of these nominee types may vary depending on the insurance company and the laws. Here are some common types of nominees in term insurance.
- Beneficial Nominee Under the Act 2015, Insurance Laws (Amendment), if policyholders select their family members, such as wife, spouse, kid, or parents, as policy nominees, they’ll receive the death benefit directly. The selected entity is granted the legal right to claim and utilize the proceeds from the insurance policy. However, the common beneficial nominees include family members and the other person financially impacted by the insured person’s death.
- Minor Nominee Designating a minor as a nominee in term insurance involves nominating someone under the age of majority (usually 18) to receive the death benefit in case of the insured person’s demise.
However, minors are not eligible to manage financial matters on their own. In that case, you’ve to appoint a guardian to address the issues of the claim and obtain the proceeds under the policy on behalf of the minor nominee.
Even you can determine how the sum assured amount will be utilized for the minor’s interest, such as education, healthcare, and general well-being. Further, your little one’s future depends on the appointee, it may advise you to appoint a guardian carefully. - Non-Family Members as Nominees
The insurance companies allow policyholders to designate non-family members as nominees in term insurance policies. If you’re an orphan with no relatives, select non-family members as a nominee, depending on your circumstances or relationships. However, the appointed non-family member would get the death coverage and claim over the fixed amount under the policy. - Multiple Nominees Are you wondering whether you can select more than one nominee in term insurance? Yes, you can appoint multiple people as nominees for your plan. Multiple Nominees in term insurance means you can designate more than one entity as a nominee for your policy,
Instead of selecting an individual beneficiary, policyholders prefer to opt for multiple nominee options when they want to allow a specific sum assured among all their family members, such as spouses, parents, kids, and siblings. - No Nominee If you haven’t designated a specified individual or your appointed nominee passed away, the death benefits shall be payable to your legal inheritor. Sometimes, the insurance company will add the death benefit to your estate. However, the sum assured amount becomes part of your overall assets and will be allocated according to your will.
What are the Rules for Nominees in Term Insurance?
The rules and regulations regarding the term insurance nominees can vary based on the insurance company and the specific policy terms. However, some common principles often apply to term insurance nominee designations:
- Insurance companies typically allow policyholders to nominate individuals or entities as beneficiaries. Some of the common nominees include family members, dependents, friends, or legal entities.
- Some insurance companies require the consent of the nominee to be valid. It helps to ensure that the nominee is aware of their role and has agreed to it.
- In many cases, nominees need to be of legal age to be eligible to receive the death benefit. If you wish to nominate minor, additional arrangements like a trust or guardian might be needed.
- Insurance companies usually require specific forms to be filled out when nominating beneficiaries. Accurate and complete information is important to avoid potential disputes later.
- Contingent nominees refer to the secondary designated entity receiving the benefits if the primary nominees are passed away.
- If you’re designating multiple nominees, you might need to specify the percentage of the death benefit each nominee will receive.
- Considering the legal implications, seeking legal advice when making nominee designations is advisable, especially for complex arrangements.
Conclusion
Since the nominee receives the benefits of a term insurance plan in your demise, it may be advisable to select someone trustworthy carefully. As per the changing life situations, policyholders may need to switch the designated entity due to the divorce, death of a nominee, the birth of a child, etc.
Now that you’ve answered the questions, how can you change the nominee in term insurance? Therefore, changing or adding multiple nominees to your term insurance plan is quite a simple procedure.
How to Change the Nominee in Term Insurance: FAQs
1. What happens if the nominee dies in term insurance?
If the nominee of a term insurance policy dies before the insured person, the information becomes null and void.
2. Who is not allowed to be a nominee?
Well, anyone can be your insurance nominee. It can be your family member, close friend, or even someone outside your family. But the preference must be given to your family members.
3. Can I have more than one nominee in term insurance?
Yes, you can appoint multiple people as nominees for your plan. Please note that the death benefits will be distributed equally among the listed people.
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Written By: Sahil Singh Kathait
A boy-in-squares bagging escapades of switching streets in groove & sensing musical airy-notes from 6 1". Under wayed nyctophile sketching the walls of life from the panorama of anime.
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