Benefits of Having a Nominee for a Term Plan
Having a nominee helps to correctly settle the claim , removing confusion and delays during the process. It allows a family to use the funds for financial needs, like: Rent, groceries, school fees, or any other bills and expenses.
Makes the claim settlement process easier
Setting up a nominee makes it clearer and easier for the insurance company to understand to whom the money is allocated. This means a faster, smoother process. A nominee eases the process of receiving money during a stressful time.
Reduce the Chances of Legal Disputes
A nominee’s name in the plan can reduce the ambiguity as to the allocation of claim money . It shows clearly who will receive the amount. This helps avoid delays, or confusion for the loved ones of the life assured.
Create a Sound Financial Plan
A nominee is added to the plan so that if untimely death of life assured happens within the policy term, the amount will be received by nominee . This makes it easier to plan how the money will be used later. It adds safety to the plan for long-term needs like school or loans.
Step-by-Step Process: How to Change Nominee in Term Insurance?
Changing the nominee in your term insurance plan is simple and easy. If you want to change your nominee , you must fill out a form and tell your insurance company. After you send the form with the new details, the company will update its records and let you know once it’s done.
Change in the nomination form
The process of changing your nominee requires you to ask your insurance company for a nomination form. This form is a letter where you document who will receive the money if something happens to you. The form can be filled out and signed online or in an office. Fill it with the new nominee’s details and your policy information and any other information as asked.
Fill the form
Carefully write all the details in the form. You will need to mention details such as your policy number e, the old nominee’s name, and the new nominee’s full name , in addition to any other details asked. Double-check everything to make sure it’s correct. Sign the form and attach any needed documents as asked by the Insurer.
Acknowledgement
Once you have sent the form to the insurance company, the company will act on the change. You will receive a confirmation that your request has been processed. This confirmation is your record of a new nominee who has been added and fully updated on your policy.
Benefits of Changing the Nominee in Term Insurance
Changing the nominee of your term insurance policy can be beneficial. Here are some ways how –
- If the nominee dies before the life assured, replacing the deceased nominee with a new one would make the death claim settlement smoother.
- If the relationship between the life assured and the nominee changes, the life assured can change and appoint another nominee. For instance, if a husband appoints his wife as the nominee and they later get a divorce, the husband might want to change the nomination and nominate his second wife or another family member.
- The facility of changing the nominee gives the life-assured control over his/her policy and also the choice of nominating an individual responsible for claiming the death benefit.
Types of Nominees in Term Insurance
Some of the types of nominees in a term insurance policy are as follows2 –
Minors
A life assured can nominate his/her minor child as the nominee1. However, in such cases, an appointee, who is above 18 years, is mandatory. The appointee would receive the death benefit on the minor’s behalf if the life assured passes away when the nominee is still a minor.
Other nominees
If you appoint any other individual or entity as the nominee, like your siblings, other family relatives or even a charitable institution, they would be considered just as the nominee entitled to receive the death benefit. They would not be considered the beneficiary2.
Common Mistakes While Changing the Nominee
Some people make small errors while changing the nominee, which can create delays during claim settlement.
Assigning only one nominee to the policy
If a plan has just one nominee and something happens to that person, it may cause delays. If anything changes, some people add multiple names, so the process stays smooth.
Appointing a minor as a nominee without specifying a guardian
When a child is named the nominee, they can’t receive the money directly. A guardian’s name is needed to handle the money until the child is old enough. Without this, it may take longer.
Failing to inform your nominee about the policy and its details
If the nominee doesn’t know about the plan, they may not claim it. It helps when the nominee knows there is a policy and where to find all the papers if needed later.
Conclusion
Understand what nomination means and why it is important in your term insurance policy. Changing the nomination is possible and is a simple procedure too. So, if needed, change your nominee and update your policy details. Also, inform the nominee of the change so that he/she can make a claim when needed.
FAQs
When Can I Cancel My Term Insurance Policy?
You can cancel your term insurance policy during the free look period. Insurance companies offer a free look period of 30 days for policies bought online from the date of receipt policy document to review the terms and conditions of the policy. During this period, you can cancel the policy and get a premium refund which is subject to certain charges.
What Happens if the Nominee Dies Before the Assured Person?
If the nominee dies before the assured person, the assured can appoint another individual as the nominee by informing the insurance company. However, if no new nominee has been appointed and the assured also passes away, the claim will be paid to the legal heirs1.
Are There Any Charges to Changing Nominee in Term Insurance?
The charges for changing the nominee depend on the insurance company. The company might charge a small fee or offer the facility free of cost. You can inquire from your insurance company if any charges are applicable or not.
Can I have 2 nominees in term insurance?
Yes, you can choose two or more people to get the money from your insurance if something happens to you. You can even decide how much each person should get.
Is it possible to change the nominee once the policy has matured?
No, you cannot change the nominee after the policy has matured. You can only make changes while your insurance plan is still active. Once the time is up and the plan ends, no more changes are allowed.
How many times is a policyholder allowed to switch their nominee? (H3)
You can change your nominee as many times as you want! There is no limit. If you want to change your nominee , just tell the insurance company while your plan is active.
When can I change the Nominee?
You can change the nominee at any time your plan is active. Just fill out a form and give it to your insurance company. They will update the name for you.
When Can I Cancel My Term Insurance Policy?
You can cancel your Term Plan in the first 30 days (this is called the “free-look period”). After that, you can still cancel, but some rules and charges may apply. You might get some money back, but not all.
What is Policy Lapse?
A policy lapses if you forget to pay for your plan, and the extra time (grace period) also ends. When this happens, your insurance stops, and you are not covered anymore. You may be able to start it again by paying what you owe.
Who is a nominee?
A nominee is the person who will get the money from your insurance if you pass away within the policy tenure. This person’s name is written in your plan. Usually, it is someone from your family. The insurance company will give the money to this person after checking the details.
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