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How To Choose Your Term Insurance Nominee

Worried about the financial security of your loved ones? Get yourself a term insurance plan. If you ask, "What is term insurance?" here is a definition that helps: A term insurance plan is a pure protection plan that ensures that your loved ones are taken care of in the unfortunate event of your demise during the policy term. A term insurance plan ensures that your family members get death benefit in such unforeseen circumstances.

Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins
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Term insurance gets its name because it is valid for a specific period or term, and this coverage period can vary, depending on the plan chosen. A term insurance plan helps your family meet their life goals even in your absence as a breadwinner. The payout they get will ensure that their savings or wealth will not be depleted in your absence and their lifestyle can be maintained without any hassles.

You can pay premium for your term insurance on monthly, quarterly, half-yearly or annual basis, depending on your convenience and as per the product terms and conditions.

Term insurance premium is affordable as compared to other life insurance plans. What’s more, you can also claim tax exemption on premiums paid for term insurance under Section 80C of the Income Tax Act, 1961, for up to Rs 1.5 lakh per annum. You also have the option of buying riders or additional covers at a nominal extra cost. One of the variant of term insurance is return of premium (TROP), wherein the term insurance premium you have paid through the policy term will be returned at the time of maturity if the life insured survives the policy term. The death and survival benefit under return of premium variant comes with tax benefits under Section 10 (10D) of the Income Tax Act, 1961. The premiums paid for return of premium variant are eligible for tax exemption of up to Rs 1.5 lakh a year as per Section 80C of the Income Tax Act. Tax benefits are subject to provisions contained in the Income Tax Act, which may be amended from time to time.

 

Who is a nominee?

 

Since a term insurance plan is all about securing the financial future of the insured person’s dependents or family members, the need for a nominee comes into the picture. A nominee is the person who receives the death benefit in the unfortunate event of the insured person’s demise. The nominee for term insurance is decided by the policyholder. The nominee can be a family member: parents, spouse or children can be chosen as a nominee. In certain cases, relatives such as an uncle, aunt or nephews can be appointed but the insurance company needs to be convinced of the said nominee’s (relative of the insured) need for insurance.

The nominee needs to submit certain documents such as:

• Original policy documents

• Original or attested copy of the death certificate

• Death claim application form

• NEFT mandate form that has been attested by bank authorities along with cancelled cheque or the passbook of the nominees

• Nominee’s ID proof

The additional documents that may be required to prove cause of death include:

• Statement of the physician attending the insured in case of natural death and an employer certificate.

• For unnatural death, a first information report (FIR), police complaint, final police investigation report and post mortem report (PMR).

The claim is verified by the insurer before processing the application.

 

Importance of nominee and benefits of the nomination facility

 

Choosing the right nominee in your family matters because this person is entrusted with death benefits from your term insurance policy. The person should be trusted upon to put the death benefit to good use. You should weigh carefully who needs this insurance payout and accordingly nominate the person.

 

Nominee particulars

 

It is important to fill the particulars of the nominee accurately or the very purpose of nomination and the term plan is lost. These details include name, age, address and relationship between the insured person and the nominee.

 

Can we choose multiple nominees under a term insurance policy?

 

Multiple nominees can be chosen, and if the first nominee does not survive the policy term, the second nominee can be chosen. In addition, death payout can be shared among the nominees chosen.

 

Can we change nominee in term insurance?

 

This is an important question, and the answer to whether you can change the nominee in term insurance planis yes. The relevant form in this regard can be obtained either online or offline, and the fresh details can be filled in the form before submission. Following this, the change of nominee will be updated by the insurer.

 

What happens if no nomination is found?

 

The nominees chosen by the policyholder dies during the policy term and details of a new nominee may not be provided in such a case, the insurance company may ask for documents to identify the policyholder’s legal heir(s) before making the death payout. Nomination of the nominee is mandatory.

 

Common nomination oversights and ways to prevent them

 

Ensure that you do not make some common errors while choosing the nominee so that there is no trouble for your loved ones later. Some of the most common oversights include:

• Not informing the nominee

As a term insurance policyholder, you will have to keep your nominee in the loop about your decision to nominate them. You will also need to give a copy of the policy documents to the nominee. If the nominee is unaware, they may not submit claims to the company.

• Providing incomplete details or not updating details

If the policyholder does not update nominee details or new information such as a change of address, it could cause unnecessary delays or inconvenience in case the nominee needs to submit claims later.

 

Conclusion

 

Buying term insurance helps safeguard the needs of your family even in your absence. It helps you ensure that your loved ones do not have to sacrifice their life goals or aspirations. Choosing the right nominee and providing accurate and updated information can go a long way in ensuring that your term insurance plan serves its purpose.

REFERENCES

https://www.businesstoday.in/moneytoday/insurance/how-to-choose-nominee-for-insurance-policy-to-help-claims/story/18850.html

https://www.policybazaar.com/life-insurance/term-insurance/articles/who-should-be-your-nominee-for-your-term-insurance/

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BJAZ-OT-EC-08288/24

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~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. 

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Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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