Insurance Tips: It’s crucial to designate a nominee for all financial accounts, including life insurance, bank accounts, fixed deposits, mutual funds, stocks, and insurance. Upon the death of an account holder or policyholder, the money deposited in their account is transferred to the nominee they have designated.

Failure to register a nominee in the insurance policy’s company records can lead to numerous legal hurdles. This can prevent the claim from being disbursed promptly, defeating the very purpose of life insurance.

Life insurance guarantees your family’s financial security during their most difficult times. When a policyholder nominates a nominee, it provides insurance companies with clear instructions about who should make the payment in the event of death. This clarity reduces processing delays and can save families unnecessary hassle during times of grief.

Adding a nominee to your life insurance plan simplifies the claim settlement process. This eliminates any legal hassles and provides significant relief to the family. Nomination isn’t just convenient—it’s also a legal requirement. Under the Insurance Act of 1938, every life insurance policy requires a nominee to ensure clarity in the distribution of policy proceeds.

Rules for nominees eased

In recent years, the rules for nomination have been simplified, made more transparent, and strengthened in the interest of policyholders. The Insurance Laws (Amendment) Act, 2015, introduced the concept of “beneficial nominee.” If close family members, such as spouses, children, or parents, are named, their claims are considered before those of legal heirs or other claimants. This protects both families and insurance companies, while also achieving the purpose of insurance.