banner

How to Change Nominee in Term Insurance?

Know how to change nominee in term insurance.

#Term-Insurance 100 Views 83 Shares
banner
Rated by users

Like every important financial decision, buying term insurance requires you to think about a few crucial things. Understanding how to change the nominee in term insurance is one of them. The chosen nominee in the plan is eligible for all the benefits specified under it. It is up to the policyholder to determine the person/persons who can receive them. 

Benefits of Having a Nominee for Term Plans 

When you are securing your life with a term insurance plan, choosing a nominee is essential. As the policyholder, you can select the nominee according to your preference at the time of purchase. The insurer is required to extend the benefits to the specified nominee upon a claim.

In general, most people choose their close family members to be the nominee. However, it is possible to change the nominee through the policy tenure. Knowing how to change nominee in term insurance beforehand can be beneficial for you if the need arises for it.  

Also Read: What is Nominee?

Before we discuss how to change nominee in term insurance, you must know why a nominee is needed. Here are some of the benefits of having a nominee for term plans: 

1. Simplify Claim Settlement Process 

Term insurance is a tool that supports your family members financially in case of an unfortunate incident. It can be tremendously distressing to lose a loved one unexpectedly. Additionally, the financial burden can immediately pile up during a difficult time in the absence of an income source.

The benefits from a term insurance plan can relieve the burden to a great extent. But, for that to happen, the claim needs to be processed smoothly and in time. In case you have not mentioned a nominee for your term insurance, the settlement can get complicated.

The purpose of securing life coverage is so that your family remains financially independent in a time of crisis. Therefore, determining the nominee for your policy is vital. If you know how to change nominee in term insurance, you can later make adjustments accordingly. 

2. Reduce the Chances of Legal Disputes 

Legal disputes are, unfortunately, common in matters of insurance. If the policyholder has not specified the nominee for term insurance, different family members may come up to claim the benefit.

As a consequence, there will be a legal battle drawing the settlement process even further. It is particularly possible when there are multiple successors of the insured person.

You can avoid the chances of legal disputes by selecting the nominee during the policy tenure. It can be even more convenient when you know how to change nominee in term insurance online. 

3. Create a Sound Financial Plan

If you are the sole earner in the family, you may have several financial responsibilities to manage. It includes providing for regular life expenses to saving enough for significant life goals. It can be a challenging feat to manage all of it within a budget. It is why you need a sound investment plan.  

When you calculate term insurance premium & adequate life coverage and purchase term insurance accordingly, you get peace of mind. You can ensure that your loved ones will have enough money to go on in troubling times. From your perspective, deciding on the nominee for the term insurance plan will give you a clearer picture of your finances.

3. Create a Sound Financial Plan

If you are the sole earner in the family, you may have several financial responsibilities to manage. It includes providing for regular life expenses to saving enough for significant life goals. It can be a challenging feat to manage all of it within a budget. It is why you need a sound investment plan.  

When you calculate term insurance premium & adequate life coverage and purchase term insurance accordingly, you get peace of mind. You can ensure that your loved ones will have enough money to go on in troubling times. From your perspective, deciding on the nominee for the term insurance plan will give you a clearer picture of your finances.

For instance, if your child is the nominee for your policy, you can plan the other investments for their future accordingly. Similarly, you can do it for your spouse, who will have different financial needs. Therefore, choosing and knowing how to change nominee in term insurance can be useful from an investment perspective. 

For instance, if your child is the nominee for your policy, you can plan the other investments for their future accordingly. Similarly, you can do it for your spouse, who will have different financial needs. Therefore, choosing and knowing how to change nominee in term insurance can be useful from an investment perspective. 

Steps to Change Nominee in Term Insurance 

You may need to change the nominee for your insurance policy under some circumstances. It could be because of the nominee’s demise or simply because of a loss of belief in the nominee. In these situations, you should know how to change the nominee in term insurance without a hassle. 

Insurers require policyholders to follow certain steps, Let’s look at how to change nominee in term insurance online or offline.

  • The policyholder needs to obtain a change of nomination form provided by the insurer. You can get this form from the insurer’s website or by visiting the nearest branch office
  • You must duly fill the form with the necessary details accurately. Next, you submit the form with the policy documents to the insurer
  • The policyholder is liable to convince the insurer of the relationship between them and the changed nominee. After that, the insurer may update the nominee details
  • Most importantly, you must procure an acknowledgment of the change from the insurer. It is used as proof to avoid any disparities during the claim settlement process

You may change the nominee in term insurance any number of times or as specified by the insurance provider. When required, it can help know how to change nominee in term insurance to do it efficiently. 

  • You must duly fill the form with the necessary details accurately. Next, you submit the form with the policy documents to the insurer
  • The policyholder is liable to convince the insurer of the relationship between them and the changed nominee. After that, the insurer may update the nominee details
  • Most importantly, you must procure an acknowledgment of the change from the insurer. It is used as proof to avoid any disparities during the claim settlement process

You may change the nominee in term insurance any number of times or as specified by the insurance provider. When required, it can help know how to change nominee in term insurance to do it efficiently. 

How to Choose a Nominee for Term Insurance? 

Choosing a nominee for your term insurance is a decision that should not be taken lightly. Take a look at the following pointers to make an informed decision: 

  • Understand your options to choose a suitable nominee. You are allowed to name a family member such as parents, spouse, children, or any distant relatives as the nominee
  • The insurer requires you to prove insurance interest for distant relatives. If you fail to do so, the claim may get rejected in the future
  • Be aware of the purpose of nominee in your particular context. For example, if you have multiple financial dependents, select a nominee who can use the death pay-out to cater to the family needs
  • You can also select multiple nominees, in which case, they will share a defined percentage of the death benefit. You can ascertain the percentage for each of them
  • In case the nominee is a minor, the policyholder must select an appointee

  • Understand your options to choose a suitable nominee. You are allowed to name a family member such as parents, spouse, children, or any distant relatives as the nominee
  • The insurer requires you to prove insurance interest for distant relatives. If you fail to do so, the claim may get rejected in the future
  • Be aware of the purpose of nominee in your particular context. For example, if you have multiple financial dependents, select a nominee who can use the death pay-out to cater to the family needs
  • You can also select multiple nominees, in which case, they will share a defined percentage of the death benefit. You can ascertain the percentage for each of them
  • In case the nominee is a minor, the policyholder must select an appointee

Mistakes to Avoid 

When you know how to change nominee in life insurance online, it makes the process considerably easier. However, there is still a possibility of common errors. Whether you learn how to change nominee in term insurance online or offline, these are some of the mistakes you must avoid:

1. False or Inadequate Information 

One of the essential steps of how to change nominee in term insurance is to provide the correct details to the insurer. If the information provided is found to be inaccurate or not enough, the insurer may reject the claim.

2. Not Updating Nominee Details 

Another mistake that policyholders make is not updating the nominee details at all. It can happen in the event of the current nominee’s sudden demise. Make sure you update the details as soon as possible to avoid any problems during claim settlement.

3. Not Informing the Nominee 

When you select a nominee, make sure that the individual is aware of their rights and entitlements. The nominee must be mindful of the policy details so that they submit the claim in time.

4. No Custodian for Minor Nominee 

If your chosen nominee is less than 18 years of age, you need to appoint a custodian for them. The claim for the policy may not be initiated if you fail to do so. You must also provide the necessary information about the custodian to the insurer.

Frequently Asked Questions (FAQs) 

Q. When Can I Cancel My Term Insurance Policy? 

A. In case you disagree with any of the terms or conditions of your life insurance policy, you can cancel it within 15 days from the date of receipt of the policy document under free look period.

Q. What is Policy Lapse?

A. Policy lapse is when your insurance plan is no longer in force. It can happen due to the failure of premium payment or other reasons. You will not be covered under the insurance policy benefits if the policy has lapsed. 

Q. What Happens if the Nominee Dies Before the Insured Person?

A. You can change the nominee details if the death of the current nominee has happened within the policy term. Otherwise, the insurance proceeds may go to the legal heirs, succession certificate holders, legal representatives, or himself.

Q. When can I change the Nominee? 

A. The policyholder can change the nominee or make a fresh nomination any time before the policy matures.

Q. Are There any Charges to Changing Nominee in Term Insurance? 

A. If you make the nomination at the time of policy purchase, there are no charges. However, there might be a nominal fee for making changes after that, during the policy term.

Sources:

https://www.policyholder.gov.in/Know_your_Rights_and_Duties.aspx

https://www.irdai.gov.in/ADMINCMS/cms/LayoutPages_Print.aspx?page=PageNo2417 [2015]

https://financialservices.gov.in/sites/default/files/The%20Insuance%20Laws%20%28Amendment%29%20Act%202015.pdf [2015]

Arn No : Aug21/Bg/26A

Calculate Term Insurance Premium

Topics Covered

4:10 Min Read Time

Get Your Premiums Back At Maturity