Nomination is an integral part of financial planning. A term insurance plan is one of the most important financial investments in life. A nominee is a person who receives the proceeds of your life insurance policy in case of your untimely death during the policy term. The nominee in life insurance can be anyone. It totally depends on the policyholder’s choice. Usually, the nominee in insurance policies is a close relative.
You can choose more than one nominee. In case the first nominee does not live out the policy term, the second one gets the benefit.
One can cancel and change nominee as and when he or she wants and it can be done as many time as one wants. It is a simple process.
According to rule, if the nominee dies while the insured is alive, the nomination becomes null and void. The policyholder can change the nomination. However, if the nominee dies after the insured’s death but before receiving the claim amount, the amount would then be paid to the legal heirs.
In the case of life insurance, beneficial nominees are the legal beneficiaries of the claim amount and no other legal heir can stake claim to the sum assured on an insurance policy.
Children, too, can be appointed as beneficial nominees on term life insurance policies. However, children below 18 years of age are minors and are legally not allowed to manage money. In such cases, the claim amount is not directly paid to the children and paid to the guardian instead.
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