How to Add or Change Nominees in Your Life Insurance Policy?

New Delhi : The life insurance policy you have in place helps in protecting your loved ones when you are no longer present. However, that payout will only go to the person you nominate in your insurance policy. The importance of nominee details is why it is essential to keep this updated. Whether it be a new marriage, the birth of a child, or some other family circumstance, adding a nominee ensures that the appropriate person receives the claim. 

Although this may seem simple, it is often a neglected task. A small, short-term task today is to ensure that your family does not have to go through potential confusion or disputes moving forward. Continue reading to see how easy it is to add or change your life insurance policy nominee without hassle.

Understanding the Role of a Nominee

A health insurance nominee is an individual the policyholder chooses to name as the recipient of the claim amount, in the event of the policyholder's death during the policy term. The nominee is the legal receiver of the benefits, assuring that the proceeds will be transferred to the correct recipient without any delays or complications. 

Usually, the nominees are trusted family members or dependents, such as spouses, children, or parents. Policyholders find comfort knowing their loved ones will be cared for in unfortunate circumstances. 

Reasons to Add or Change a Nominee

Updating or adding nominees reflects the policyholder's current life situation and family. Here are noteworthy and key reasons to add or change a nominee:

● Life Events: Changes in your civil status, such as getting married/divorced, or having a child, will require updates from nominees. As families grow, so do our roles in financial planning and making insurance decisions. 

● Changes in Relationships: Updating will ensure the correct beneficiaries are listed if the previous nominee is no longer in close contact or has passed away.

● Financial Dependency: If the financial dependents change, nominee changes may be applicable to support those economically dependent on you.

● Trust and Responsibility: A trustworthy and accountable nominee can assist in an effective claims process.

● Avoiding Unnecessary Issues: Streamlining claim processing enhances the resolution of complex claims-related issues by systematically removing outdated designated nominees, which can cause problems leading to delays and errors.

When Can You Add or Change a Nominee?

There are different touchpoints in the insurance journey where a nominee may be added or changed. While policyholder flexibility exists, specific timing and documentation variables come into play. These include, but are not limited to:

● When buying a new policy, fill out the proposal form. This is particularly relevant to term life insurance, where early nomination in the process assures that the benefit goes to the right person if something happens in a policy term.

● This is done at the designated update periods through the regular premium schedules or at the time of policy update.

● Every policyholder is entitled to modify policy details during the active policy period. Changes will take effect upon submission of the prescribed documentation to the insurer.

● Intentions and legal obligations must be aligned with the current nominee during the pre-claim submission.

● Policyholders can update their nominees alongside major milestones such as getting married, being separated, or having a dependent. Legally, a new nominee can be appointed only after the existing nominee has died or is incapacitated. The nominee's details should be updated when

● When an insurance policy is transferred to a new policyholder. i.e. policy portability or switching, to update nominee details accordingly.

Step-by-Step Process to Add or Change a Nominee

If you follow a systematic approach, your insurance provider poses no challenge when you wish to add or update a nominee. The main steps are as follows:

Step 1: Check Nominee Policy

Contact the insurance company or consult your policy to verify the nomination terms to avoid surprises. Examine if you can add/change the nominee document within the policy term. Some policies have terms, like a maximum of three nominees.

Step 2: Gather Necessary Documents

Collect the policy document, nominee identification proof, Aadhar or passport and proof of relationship. This gives evidence to establish the nominee's identity and avoid disputes in the future process of claiming the amount or benefits.

Step 3: Complete Nominee Change/Add Form

Forms for adding or changing a nominee are available on the companies'/agents' websites, and you can retrieve them from there. Please fill in the necessary details of the nominee, including their full name, birth date, relationship to the policyholder, and contact number.

Step 4: Submit the Application

Complete a form and provide any additional documents as requested by the insurer. Submit the forms via the insurer's designated submission channels, such as online, email, and/or regular mail. Save the proof of submission or acknowledgement receipt in case you need to check on the status of your application.

Step 5: Verification and Confirmation

The insurer will review the submitted documents to verify their accuracy. The records are updated if all documents are verified, and a confirmation email or letter will be sent. You must keep this confirmation and the revised policy for future claims.

Step 6: Make Sure to Keep Records Current

Check the nominee details occasionally, especially after significant life events, to ensure your records are accurate. Having updated nominee records helps prevent legal complications, guaranteeing that the insurance benefits are provided to the intended beneficiaries without unnecessary delays.

Key Points to Remember Before Adding or Changing a Nominee 

There are a few key considerations to keep in mind before updating nominee details. The following section identifies some critical points, like types of nominees, the rules of consents, the rights of claimants, and things to avoid doing when updating complex changes:

● Select a trustworthy nominee and family member to enable quick and effective management of the claims.

● While it is permitted to nominate a child, a legal guardian must be appointed to manage the funds and oversee them until the child reaches the age of 18.

● Accurate nominee details prevent claim disputes or rejections, especially after significant life events such as marriage or childbirth.

● Some insurers allow for one policy to be assigned to multiple nominees. In such cases, allocating share percentages to each nominee prevents ambiguity regarding the division of benefits. With life insurance, which lasts for your entire life, keeping the nominee details up to date ensures that the benefit is distributed without issues.

● Remember, a nominee is the claimant, but the legal heirs may hold some interests over the sum, so synchronise your will with your insurance policy.

● Providing complete and precise information about the nominee is vital; any errors will result in the claim being delayed or even refused.

● As long as the policy is in force, you may submit a formal request to change the nominee details, so check your nomination details within a set period.

● By adding or changing a nominee, you ensure the prompt receipt of insurance benefits by your loved ones with no hitches or holdups.

Changing or updating nominees on a life insurance policy is not just a formality; ensuring your family receives all the benefits and avoids complications is essential. Life changes, such as marriage, the birth of a child, or the passing away of a loved one, require action. Keeping nominee details accurate, documentation good, and the insurer aware is part of the policy's purpose; it works for your family when needed.