Basic Things Related to Nominees in Term Insurance
Updated On Nov 03, 2021
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Term insurance is one of the best insurance instruments designed to safeguard your family in case of sudden death due to any tragic event. The term insurance covers your loved ones through a lump sum amount equal to policy coverage. The company provides the claim amount only to the nominees or beneficiaries of the policyholder.
Who Is A Nominee?
A nominee is an individual chosen by the policyholder to get the death benefit of the term insurance plan. It can be any person from family members like a parent, spouse, children, etc. You can select anyone as the nominee of your choice or who is financially dependent on you.
You should give all the required details of your nominee while buying the policy so that the insurance firm knows whom they have to get in touch with in case of your demise. However, you can also choose the nominee at any later date; it could not do so while purchasing the plan. Also, you can select more than one nominee to distribute your insurance claim amount in terms of sum assured.
Benefits of Choosing A Nominee
Some benefits of nominating a beneficiary for your term insurance plan are as follow:
1. It simplifies and expedites the claim settlement procedure as the insurance company does not have to look for your legal heir after your demise.
2. It avoids any legal complications that may arise from multiple people to claim over the claim amount. It also makes it easier for your claimant to get the funds easily without any discrepancy.
3. It helps you to complete your aim to give assistance to the people in the family who are actually in need. For instance, if your demise happens within the policy period, then the death benefit can assist your family members to continue their lifestyle without any trouble.
How To Change the Nominee of A Term Insurance Plan?
Term insurance is a long term investment tool where you might find the need to change your nominee There are different reasons which can lead you to switch your nominee like the unexpected demise of the nominee, change in your relationship, and so on. In such a case, the knowledge of the detailed process to change the nominee is required which is given below:
1. Fill out the change of nomination form. You can do the same online or offline. It is easy to get and fill this form as it requires only basic details about the policy and person you wish to nominate as the nominee.
2. You need to submit this form to your insurance company and explain the reasons for appointing a new nominee.
3. A written acknowledgement should be obtained from the insurance company. It will give you a confirmation that your insurance company has agreed with your decision.
It is advised to keep your family members updated with all the information related to all the policies you have bought or any modifications made to them. If you wish to make any change in the name of the policy nominee, you can also update the same details in your will to prevent confusion.
Also read - A Quick Guide to Term Insurance
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.