Every individual might wish to stay secure during an unfortunate event such as death, physical disability, critical illness, and so forth. The growing unpredictability has given rise to the increase in term insurance. A term policy can be pure protection, which is formulated for the financial security of your loved ones during an emergency in your absence.
A term policy works towards the betterment of your nominees in the future. After your demise, a term plan can offer death benefits to your nominees to ensure their financial well-being. However, your nominees can be eligible to receive a death pay-out only if you have included their names under your term life insurance plan. If you haven’t mentioned your nominees, they might suffer financially in your absence.
When you fail to provide your insurance company with a nominee or if your nominee dies during the on-going tenure of the term insurance, the following rules, given below can come into effect:
- Your insurance company can provide the pay-out to Class 1 legal heir who can be from the following:
- Your spouse
- Your son
- Your parents
In case you have made a will during your survival period, the following procedure mentioned below can be valid:
- Your claim amount can be distributed in accordance with your will.
- If the court issues a succession certificate, the claim amount can be handed over to your insurance provider based on the judgement of the court.
- The process can take place according to the Indian Succession Act, 1975
Under term insurance, you should compulsorily list down a nominee to ensure that he/she continues to reap the term insurance benefits. As the nominees, your family can collect the total sum assured value as well as the applicable bonuses under term insurance. Therefore, you should select your nominees wisely at the time of purchase. While buying term life insurance, you should submit the following details to elect the nominees:
- Name of your nominee
- Age of your nominee
- Current residing address of your nominee
- Your relationship with the nominee
Note: Since you might require official documents, you should confirm from your insurer about the same.
Selecting the right nominee can be a tricky business. While many of you might have a single person you would want to benefit from the claim amount, the rest of you might be unable to choose from multiple options. If you want multiple people to benefit from your online term insurance policy, let’s take a look below:
- Divide the claim amount proportionately amongst the total number of nominees.
- List down an appointee in case you want to list down a minor as your nominee. Since the amount cannot be given to the minor directly, your insurer can provide the amount to the appointee.
There can be specific scenarios in your life that might demand a change in your nominees. For instance, if you have remarried, your nominees can be different from the previous ones. As a policyholder, you have the liberty to change the name of your nominees. Let’s go through the following steps mentioned below to change your nominees:
- Obtain the nomination form from your insurer. You can get the nomination form either online or offline.
- Fill in the accurate details and submit the form back to your insurer.
- Collect an acknowledgement form from your insurer to avoid any discrepancy in the future.
To sum up, the nomination facility under term insurance can safeguard the interests of your nominees after your death. Once you include your nominees, your insurance company can give away the death payout to the noted nominees of the term policy. In case there are any changes, you should inform your insurer immediately.