Life insurance is a must-have in one’s financial portfolio. One should always secure their family by taking a life insurance with sufficient cover. Also, disclosing of the insurance facts with a spouse or the nominee is a must thing to do. Failing to do it, claim settlement can become a difficult process.
Vinay Taluja, EVP and Head Cross Sell Landmark Insurance Brokers said that since term insurance policies do not offer any survival benefit hence payment of a claim on the death of the life insured is the “Moment of Truth” both for the deceased family and the Insurance Company. “Assuming the Policyholder has given all necessary and true to his knowledge declarations while buying the policy, the insurance company should be settling the claim smoothly. Insurance laws further protect policyholders’ interests by ensuring that an insurance policy shall not be called in question on the ground of misstatement after three years,” he added.
However, claims are smoother when one has a definite nominee name provided for the policy claims. Here are some facts you should know about insurance nominees:
A Nominee and a Beneficial Nominee – what does it mean?
A nominee is just the receiver of the money. He has to eventually hand over the monies to the legal heirs. He himself cannot consume the money unless he is the legal heir.
In case of death of the life assured, benefits are payable either to the nominee(s) where a valid nomination has been registered by the company or to the legal representatives who obtain representation to the estate of the policyholder or to such person or persons as directed by a court of competent jurisdiction in India.
Taluja said that a beneficial nominee is the end consumer of the money received under the insurance policy claim. Therefore, if you have made someone a beneficial nominee during the issuance of policy then in such case that person (beneficial nominee) has the right to use money received during the claim settlement. “Under the new Insurance act, Parents, Spouse and Children, if any one of them is the nominee in the policy, they automatically become the Beneficial Nominee and hence they can consume the monies too,” he added.
Other important facts to know about nominee
=> In the case when the nominee is a minor, the policyholder may appoint/designate any person to receive the money secured by the policy in the event of policy holder’s death during the minority of the nominee.
=> By an endorsement, the nomination can be cancelled or changed at any time before the policy matures.
=> Where the policyholder whose life is insured nominates any of the following -Parents, spouse, children, spouse and children or any of them - then the nominees are beneficially entitled to the amount payable by the insurer to the policyholder. However, if the policyholder has not granted such beneficial title to the nominee having regard to the nature of his title, then he/she will not be considered as a beneficial nominee.
=> If a nominee dies after the policyholder but before his share of the amount secured under the policy is paid, the share of the expired nominee shall be payable to the heirs or legal representative of the nominee or holder of succession certificate of such nominee.
=> In case when a nominee dies before the policyholder, the proceeds are payable to policyholder’s heirs or legal representatives or holder of succession certificate.
Processing documents required
For processing a claim under this policy, insurance company normally requires the following documents
a) Original Policy Documentd) Cancelled cheque is required for processing electronic payment
“Remember Claim payments are made only in Indian currency in accordance with the prevailing Exchange control regulations and other relevant laws and regulations in India,” said Taluja.