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Beneficial Nominee for Term Insurance

IndianMoney.com Research Team | Updated On Saturday, July 20,2019, 11:27 AM

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Beneficial Nominee for Term Insurance

 

 

Mr Raghu approached a life insurance company to buy a term insurance policy, as he wants to ensure financial safety to dependents in his absence. The insurance company collects the requisite details to offer him the best term insurance policy.

The insurer also asked him to produce the beneficial nominee details, but Mr Raghu was confused. He is not clear on who is a beneficial nominee. He also wants to understand the difference between a nominee and a beneficial nominee. Here is a piece of information for people with such concerns.

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Beneficial Nominee for Term Insurance

A Nominee vs Beneficial Nominee                                                        

A nominee is a person nominated or appointed by the policyholder. He or she is just the receiver of the death benefit under the term insurance plan, if the policyholder expires within the policy period. The nominee has no legal rights over the money. He just hands over the death benefit to the legal heir.

A beneficial nominee gets to enjoy the death benefit. Benefits are payable to both nominees and beneficial nominees in case of demise of the policyholder, within the term of the plan.

See Also: Nomination In Life Insurance

What Should you Know on the Nominee?

  • If the nominee is below 18 years of age, the insured may nominate another person.
  • The policyholder can cancel or change the nomination any time prior to the maturity period.
  • The nominee can be your parents, spouse and children. They automatically turn out to be beneficial nominees.
  • If the nominee expires prior to the policyholder, the proceeds are payable to the policyholder’s heirs.
  • In term insurance, the policyholder can appoint multiple nominees.
  • If the policyholder forgets to update the nominee details and expires during the policy tenure, the insurance company retains the right to give the claim amount to the Class 1 legal heir, who may be the father, mother, spouse or son of the insured.
  • The claim amount is distributed as per the Indian Succession Act, 1952, if the policyholder leaves behind a WILL.

See Also: How Much Term Insurance Should I Buy?

Who Should be the Beneficial Nominee?

If you are expecting your spouse to enjoy the death benefits, he or she must be the beneficial nominee of the term life plan. If you want your son to enjoy the death benefit, he has to be the beneficial nominee.

If you appoint your brother as a nominee to your term insurance policy, he has to hand over the death benefits to legal heirs. The choice is yours. The insurance company gives you the freedom to choose the right beneficial nominee.

It is worth mentioning that only the immediate members of the family can be chosen as beneficial nominees. What about non-family members? Even though you intend to appoint a non-family member as your beneficial nominee, it is very complicated to prove the insurable interest. The insurer might deny the nomination. When you choose multiple beneficial nominees, the benefits must be allocated in terms of percentages while availing term life insurance plan.

See Also: Term Insurance Benefits, Drawbacks and the MWP

Beneficial Nominee Details

The policyholder has to furnish the following details related to the beneficial nominee, while availing the term insurance plan:

  • Name
  • Current age
  • Current and permanent address
  • Relationship with the policyholder (father, son, spouse, wife, mother)

See Also: Choose the Nominee of a Life Insurance Plan Wisely

 Documents Required for Claiming the Term Insurance Policy

  • The original copy of the term insurance policy.
  • The death certificate of the policyholder to be collected from the local municipal authority.
  • Other important documents as required by the insurance company.

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IndianMoney.com Research Team

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