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Understanding The Role Of A Nominee In Life Insurance

Updated On Aug 19, 2021

Nomination is the process by which the policyholder appoints a person to receive policy benefits in case of a death claim. So, in case of an eventuality, the life insurance company pays the policy proceeds to the appointed person called the Nominee. 

A nominee is appointed by the policyholder and to anyone whom the policyholder wants the financial benefits to rest upon, in case of his or her untimely demise. General practice is to appoint a spouse, children or parents as the nominee. 

Below is the list of the possible nominees a policyholder can choose so that the financial benefits rest upon that person after the policyholder's death. 

Who Should Be Your Nominee?

This is a list of the types of Nominees you can choose for your life insurance policy: 

  • Beneficial Nominees

If any immediate family member is made the nominee, then they will automatically become the beneficial owners of the claimed benefits and be referred to as 'Beneficial Nominee'. This means that the death benefit will be paid to a beneficial nominee and not to any other legal heirs, irrespective of anything. It is always advisable to nominate an immediate family member as the nominee to ensure that there are no disputes in future between the nominees and legal heirs. 

  • Minor Nominee

It is a normal practice for people to appoint their children as their nominees for their life insurance policy. And rightly so, it is their future one wants to secure their future even if one is not around. But children below the age of 18 years, are not considered eligible to handle claim amounts. Hence the policyholder needs to assign an appointee. 

  • Non-family Nominee

Even though one can nominate distant relatives or even friends, the fact is that it will be very difficult to prove 'insurable interest'. This along with the fact that there is a moral hazard in appointing such a nominee, the insurance company might refuse the nomination and might ask for further explanation. 

  • Changing Nominees

One should make sure that the nomination of something as important as life insurance is up to date and is in sync with whom the policyholder actually wants to appoint as the beneficiary. A policyholder can change the nominee as many times as he or she wishes but the latest nominee supersedes all previous ones. 


Given the real purpose of life insurance, one cannot overstate the importance of appointing the right nominee. Therefore, ensure that you have the right person as the nominee. This will ensure that possible future disputes are avoided and the money is paid only to those whom you want.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard. 

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