The untimely demise of Mr 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 Mr Srivastava’s term insurance policy of Rs 50 lakh. Reason: The name and details of the nominee(s) were incorrect in his term insurance policy document. But what is term insurance And why do you need to include nominee details in your term insurance policy?
The main purpose of term insurance is to financially secure your dependents, in case of your untimely demise. This is especially crucial in times like these when there is so much uncertainty around due to the COVID-19 virus. As per the latest reports, there has been a surge in COVID cases in the country recently, which makes it necessary to ensure you have a plan for any kind of uncertainty. [1] This is where a term insurance plan comes in.
By opting for a term plan, policyholders can expect the insurance company to pass on the benefits of the policy to their loved ones in a hassle-free manner on happening of the unfortunate event, subject to the terms of the policy. The timely disbursal of claim amount to nominee becomes crucial as it helps in clearing financial liabilities, repaying EMIs, paying for child education if required, and much more. But, there are cases where the beneficiaries, like the example above, face difficulties in receiving the benefits of the plan because of incorrect details of a nominee. Here is a complete understanding of the importance of nomination and why you should never 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 unfortunate demise, your nominee can get in touch with the insurance company to file the insurance claim. The nominee can be your immediate family members like spouse, children, and parents. It is important to note that the insurance company would only entertain an insurance claim from a listed nominee in the policy. In the absence of appropriate details, the legal heirs can make the claim, but the process could become cumbersome and prolonged.
While mentioning the details of your nominee in your insurance policy, you should also ensure that the nominee is aware of the same. Make sure you also 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 person, they can do so. You can list down multiple nominees and specify the share for each of them. For instance, if you have a term insurance policy of Rs 1 crore and wish to share the amount between three members - say your spouse and two children - 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 accordingly. In case your nominee is a minor, he/she will receive the term insurance benefits after reaching the age of 18 years. Until 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 and 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 you change nominee(s)?
You have the option of changing your nominees during the policy term. With Bajaj Allianz Life, the process is seamless. Here is a quick guide on how to change nominee in a Bajaj Allianz Life 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.
In a nutshell
Just as a term insurance policy is essential to protect your loved ones from spiralling into a financial crisis, nomination is equally crucial for them to receive the benefits. If mentioned accurately, the term insurance amount can meet 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 Life, do not forget to mention the nominee details.
. **Source:[1] https://indianexpress.com/article/india/surge-in-covid-cases-centre-writes-to-five-states-uddhav-warns-second-wave-at-door-7198671/BJAZ-WEB-IC-00217/21x**
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