5 Things a Nominee Must Know about Your Life Insurance Policy

One can find at least one life insurance policy in every house and receive at least one call from an insurance agent every day requesting you to buy a new life insurance policy. The increased number of term insurance policy providers in the market has resulted in an increased variety of term policy schemes. The features of each term policy scheme are different from the other. So, a nominee must be well-versed with term insurance to ensure proper claim settlements.

 

What is the Need for Nomination in Insurance?

Nomination is mandatory in a term life insurance policy. Without proper nomination, the insurance policy provider will not be able to transfer the insurance proceeds in the event of the death of a policyholder. So, as a policyholder, you should nominate your dependents as eligible persons to receive the claim amount after your death.

 

Who Can be a Nominee in a Term Insurance Policy?

A nominee can be any person that a policyholder elect. It is not mandatory for the nominee to be a spouse, children, or parents of the policyholder. A policyholder should provide correct nominee details during policy creation, or it will be difficult for the nominee to receive the settlement money.

 

5 Things a Nominee Must Know About Your Life Insurance Policy

 

The term life insurance policy is an agreement between the policyholder and the insurer. So most of the communications happen only between the policyholder and the insurer. In many cases, individuals are not aware that their names have been nominated in a term insurance policy. As a nominee, there are certain things you should know.

 

1) Check whether all your details are filled in correctly.

Once you know that you are nominated in a term policy, you should ask the policyholder to share the policy documents and forms. All your personal information provided in the nominee application must be correct. Check the spelling of your name, the address provided, age, date of birth, etc. The information provided in the nominee application should match with your official documents like Aadhar card, birth certificate, passport, etc. All these are extremely important during claim disbursement. If there is a discrepancy, the policy provider may stall the claim disbursement.

As nominees, we don’t feel the need to check the correct details in the nominee application until there is an emergency and the claim money becomes the only way of survival.

So, check all your details properly and ensure a smooth claim disbursement when you need it the most.

 

2) Understand the term policy thoroughly.

Nowadays, there are several kinds of insurance policies available in the market. Each policy has its benefits and drawbacks. If the policyholder has chosen a whole life policy, the benefit is guaranteed¹. It means there is no policy tenure. Whenever the policyholder dies, the nominees will receive the maturity value from the insurer. In a term policy, you will receive the claim amount only if the policyholder dies during the policy term. This is vital information you should know as the nominee of the policy.

You should also be aware of the policy’s benefits, the premium amount, the maturity value, etc. This knowledge will give you an edge during the settlement process and save procedural delays.

 

3) Stay connected with the policy.

Life insurance policies are for the long term. As a insurance nominee, you should stay connected with the policy for the entire tenure. Several responsibilities are assigned and expected of a nominee. You should be fully aware of the number of nominees to a policy and if the personal details of all the nominees are correct. During the policy course, if there is any change in personal information like address, phone number, etc., it should be updated in the policy. These details must also be verified for other nominees.

As a nominee, you should also check whether the premiums are paid on time by the policyholder. If there is a default in the premium payment, it will affect claim disbursement. You should also check whether the sum assured is enough considering your expenses. If it is not, you should ask the policyholder to increase the sum assured and adjust the premium accordingly. You should track the policy, making yourself a part of the insurance process.

 

4) Be clear about the claim process.

There are several steps involved in a claim settlement process. You will need the policyholder’s death certificate, personal documents, policy documents, etc. Understand the entire process well. If you know that you will need a valid death certificate for the claim, secure a valid death certificate and keep it safe.

If there is more than one nominee to a term insurance policy, keep them informed about the claim process. All of them should have proper documents ready for claim settlement.

Though it is difficult to be calm during an emergency, still it is always advisable to take the necessary steps required for the claim settlement at the earliest.

 

5) Have all the important contact details.

Most people buy an insurance policy through an agent. As a nominee, you should have the agent’s contact details saved on your mobile. If the policy was opened directly, have the insurance officer’s number saved. These are vital contacts during an emergency. They are already aware of your policy details and will help you get the claim at the earliest.

 

Conclusion

As a nominee, you should always be aware of your responsibilities. The points mentioned above will help you understand your responsibilities. The proper knowledge of a policy not only helps during the settlement process but also helps you manage your finances accordingly. If you know that you will receive a lump sum upon the policyholder’s demise, you can plan your expenses better.

 

L&C/Advt/2021/Oct/1871