The nominee receives and holds property of the deceased, till he is legally bound to distribute this property to legal heirs. Similarly in life insurance, a beneficiary is a person whom you nominate to receive the proceeds of your life insurance policy (sum assured) on death. You can nominate more than one beneficiary and specify their shares in the policy proceeds.
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Nominee is the person with the legal rights to distribute the proceeds of the life insurance policy to the legal heirs, when the insured dies. This has led to many legal disputes between the legal heirs and nominees of life insurance policies.
As per new rules, only the person(s) mentioned as the beneficial nominee, would receive the proceeds of the life insurance policy. Other persons, be it parents, children or spouse, cannot claim from the proceeds of the life insurance policy, unless they are mentioned as beneficial nominees.
Hence, make sure you nominate the right person as the beneficial nominee when filling the application form of a life insurance policy, if not the proceeds would go into the wrong hands.
Claims made by the legal heirs would not be honored, if they are not nominated as the beneficial nominee. This has made life easy for insurers as they don’t have to get into unnecessary legal battles, which consume a lot of time.
SEE ALSO: What is a Term Life Insurance Policy?
SEE ALSO: Why You Need A Term Insurance Plan?
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