Who Should Be the Nominee for Your Term Insurance Plan?
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A term insurance policy is designed to help your family if something unfortunate happens to you in the future. It's a comprehensive insurance policy with a set payoff amount. The payment is made as a lump sum or regular monthly, quarterly, semi-annual or annual instalments. When buying a term insurance policy, you've probably come across terms like the nominee, dependent, or beneficiary. Every term plan includes a death benefit, which requires you to name a nominee.
Who Can Be A Nominee?
As previously stated, each term insurance policy requires you to name a candidate. It is necessary that you provide as much information on your nominee as possible. Your nominee can be a beneficial nominee, i.e., your spouse, children, parents, members of your family or the entire family. Some insurance policies allow beneficiaries to be non-family nominees i.e., parents-in-law, uncles, aunts, and adopted dependents, as well as distant relatives and friends. It is crucial to supply the insurance provider with required papers as proof in the case of distant non-blood relatives. If you don't follow these steps, the claim made by your nominee after your death may be rejected.
What are the Benefits of Having A Nominee?
In your absence, a proper nominee will guarantee that your family is well cared for. Hence, you must choose a nominee you have the most faith in and will be in charge of your family after your death. You can even nominate a distant relative or non-blood relative. You can also make a list of several nominees. This can be a helpful strategy if you want the death benefits to be split equally among your children and spouse. If the first nominee does not live to see the end of the policy term, you can choose a replacement. You can also cancel a nominee at any moment and any number of times during the policy term, just like any other type of insurance policy.
Can You Change Your Nominee?
If the policyholder so wants, a nominee can be replaced later. In this case, the policyholder must contact the insurance provider and request a change of nominee. It is advised that as a policyholder, you should verify your financial records on a monthly basis to guarantee that in the event of a big life event, the beneficiaries receive the benefit as soon as possible. An insurance policy purchased before marriage with parents as a nominee is a classic example of this. A person may want to replace or add spouse and children as beneficiaries after getting married and having children. Another scenario is the death of an existing nominee. There is no limit to the number of times a nominee can be changed during the policy's term, though certain companies may charge a fee.
Take Away
When it comes to arranging your family's financial future, having the appropriate person designated as the nominee will provide you with much-needed peace of mind. Aside from that, you must purchase your term insurance policy from a reputable insurance company to avoid any claim denial.
Also read - Which Life Insurance Policy Should I Buy?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
