A
NOMINEE is the person who has been proposed by the policy-holder for receiving
the claim amount of the life insurance policy, upon his/her death. It is important
that the nominee has an insurable interest in the
life of the insured. Thus, insurers insist
on full details of the nominee and relationship with the policy-holder. An
important rule of nomination is that your
nominee should preferably be a nearest relative who is expected to take care of
the immediate needs of the family members of deceased life assured upon his/her
death. In case of the nominee being a minor,
the insured is required to appoint a custodian whom the claim amount would be
discharged to till the appointed nominee turns 18.
Importance of nomination: A nomination
serves as an instruction for the insurer as to whom the claim amount needs to
be settled in case of death of insured. In absence of a nomination, the insurer would
call for a succession certificate from the claimant, which is issued by the court of law. This tedious
procedure can be avoided simply by ensuring
nomination at the proposal stage or subsequent change of nomination in case of nominee's death. Absence of a valid
nomination defeats the very purpose of providing immediate relief to the
family members in case of untimely death of insured.
Things
to keep in mind:
1) Inform the nominee or any other member
of your family about the policy and the nomination so that they can make the
best use of the sum assured in your absence.
2)
In the unfortunate event of the nominee's
death during the term of the policy, it is important that a new nominee is appointed, by informing the insurer.
3)
Multiple nominations can generally be avoided as such a situation could end up as a legal dispute. Since the insurer would
prefer to hand over the entire claim amount to only one of the nominees on
getting consent from other nominees for doing so, the dispute could come in terms of submission of such consent amongst the
various nominees.
