Once you have fixed the premium amount of your life insurance policy and agreed to its terms and conditions, comes a very important step – naming the beneficiary. This beneficiary, also called nominee, is entitled to receive the sum assured paid by the insurance company in the event of your death.
Insurance companies ask you to name a beneficiary at the very onset itself, so that the payout process faces no hindrances, should anything happen to you. As a result, the nominee plays a crucial role in your life insurance policy. It is essential that he be aware of all the details of your policy, more so the procedure of claiming the insurance money.
Keep your nominee in the loop about the policy
Typically, most people choose either their spouse or their child to be the nominee. In some cases, people nominate close relatives too.
Once you buy life insurance, make it a point to explain the finer details of the policy to your nominee, right from the premium amount you are paying to the sum assured that the policy promises. This way, you will ensure that your nominee is well-aware of the policy details.
If the beneficiary named by you is a minor, you will be required to name an adult who will receive the assured sum on behalf of the minor.
Why you must keep your nominee informed
The well-being of your family is undoubtedly of utmost importance to you. When you buy a life insurance policy, it is with the view that in the event of your death, the financial security of your family is not threatened. Not keeping your nominee informed about the policy defeats this very purpose.
If you are gone and your nominee is not well aware of your policy details, it can pose a major hindrance when it comes to claiming the compensation amount. Your nominee will have to run around for the money that is rightfully his. There are chances he may not even get it or it may take longer than usual.
In order to avoid such an eventuality, it is best advised to keep your beneficiary informed. In case of the nominee being a minor, make sure that a trustworthy adult knows about the policy.
What your beneficiary must know
During your lifetime itself, ensure that the nominee has access to your policy and its details. This will simplify the claims process in case you are gone. Typically, your nominee will need the policy contract, a form that will help process the claims and a death certificate to ensure that the sum assured reaches him. In exceptional cases, additional documents maybe required too. At the time of buying the policy, you can always request the insurance agent to apprise you and your nominee of the claims process. It may sound trivial, but come to think of it practically, it is extremely essential. It will save your nominee a lot of running around and unnecessary paperwork.
So whenever you buy a policy in the future, make sure that the person you nominate knows all about the policy and the claims process. Do this and only then will your family be financially stable even after you are gone.
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