How to Change the Nominee in Term Insurance?

 

Benefits of Changing 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.

 

Process of Changing Nominee in Term Insurance

 

You can change the nominee in term insurance simply by informing the insurance company online or offline3.For the online mode, some insurers may allow you to change the nominee simply by submitting the nomination form via email or by logging into your account. For the offline mode, you may have to fill out and submit the nomination form at the nearest branch office to change the nominee. Check with your insurer for the required process.

 

Common Mistakes While Changing the Nominee

 

Some of the common mistakes when changing the nominee are as follows –

• Not informing the old nominee of the change
• Not informing the new nominee of adding his/her name in the nomination
• Not informing the insurance company of the change. In such cases, the change will not be endorsed in the insurance policy and will not be effective.

 

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

 

1. 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 15 days (30 days for policies bought online)4 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.

2. 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.

3. 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.

Reference

1. https://www.insuranceinstituteofindia.com/downloads/IC38/ALEnglish.pdf (page 253)

2. https://www.livemint.com/money/personal-finance/declare-beneficial-nominees-while-purchasing-life-insurance-11625602384133.html

3. https://www.zeebiz.com/personal-finance/news-how-to-change-nominee-in-insurance-policy-71458

4. https://policyholder.gov.in/free-look-period

BJAZ-WEB-EC-06353/24