The untimely demise of K.C. Srivastava, 55, shook his family emotionally and financially. The sole breadwinner of a family of four, his unfortunate death left his dependents in a lurch. Adding to the woes, the family members had to run from pillar-to-post to receive the benefits of Srivastava’s term insurance policy of Rs 50 lakh.
Reason: The name and details of the nominee(s) were not listed in the term insurance policy document.
The main purpose of term insurance is to financially secure your dependents, in case of death. The policyholders expect the insurance company to pass on the benefits of the policy to their loved ones in a hassle-free manner. The timely disbursal of claim amount becomes crucial as it helps in clearing financial liabilities, repaying EMIs, pay for education if required, and much more.
But, there are cases where the beneficiaries, like the example above, face difficulties in receiving the lump sum because of missing or no details of a nominee. Here’s a complete understanding of the importance of nomination and why you should miss it.
Who is a nominee?
Simply put, a nominee is a person who receives the benefits of your term insurance policy. In case of your demise, the insurance company will contact the nominee for claim settlement purposes. The nominee can be your immediate family members like spouse, children, and parents. Many insurers also allow relatives such as uncles and nephews to be listed as nominees.
While mentioning the details, you should also inform the nominee and share policy documents with him/her for faster claim approvals, when required.
How many nominations are allowed?
If the policyholders want to split the claim amount with more than one family member, they can do so. You can list down multiple nominees and specify the share of each of them. For instance, if you took a policy of Rs 1 crore and wish to share the amount with three members, you will have to mention the percentage share for each of them.
It is advisable to have multiple nominees as in case of death of a nominee during the policy term, the benefits can be passed on to the second person. In case your nominee is a minor, he/she will benefit after reaching 18 years of age. Till then, you can assign an adult as the custodian.
What details are required?
It is important to list down details of your nominee-such as name, phone number, address, relationship with the policyholder- while filling the term insurance application. In case of any change, you must update the policy with new details, else claim settlement can hit a roadblock.
Can we change the nominee(s)?
You have the option of changing your nominees during the policy term. With Bajaj Allianz, the process is seamless. Here’s a quick guide on how to change nominee in a Bajaj Allianz Term Insurance policy:
- Get the Change of Nomination form, online or offline.
- Submit all the details of the new nominee(s)
- Get the acknowledgment receipt from the company for records.
It is noteworthy the nomination can be changed multiple times.
What happens in case of no nomination?
If you fail to furnish a nominee, during the untoward event the insurance company dispatches claim to the legal heir- insured’s spouse, son, father and mother. However, this mistake can lead to long processes.
In a nutshell
Just like a term insurance policy is essential to protect your loved ones from spiralling into a financial mess, nomination is equally crucial for them to receive the benefits. If mentioned accurately, the term insurance amount can meet monthly expenses of your family members, fulfil their financial goals, and pay off liabilities. Thus, while availing a term insurance policy from any insurer such as Bajaj Allianz, don’t forget to mention the nominee.