LIFE INSURANCE
What is the procedure for changing the nominee of an insurance policy?
—B.R. GAUR
You can change the nomination of your life insurance policy at any time after its commencement by sending a request to your insurance company. For this, you shall be required to submit the change in nomination form duly filled, signed and witnessed.
When you make a nomination, you continue to be the owner of the policy and the nominee does not have any right under the policy as long as you are alive. In addition, the nominee only has the right to give a valid discharge to the policy in the event of death of the policyholder and the nominee may not be the rightful owner of the policy proceeds. In such a case, the legal heirs may also have the right to claim their share from the nominee. Generally, insurers suggest only close family members should be named nominees.
I purchased a term insurance policy from SBI Life Insurance Co. Ltd two years ago. At that time, I had to undergo a medical test but I didn’t disclose that I was an occasional smoker and drinker. I had also stated that my parents are in good heath, although my mother had diabetes and high blood pressure, both in check. If any claims arise in the future, say 15-20 years down the line, can the insurance company reject the claim saying that I withheld information?
—D.S. PATHAK, EMAIL
Life insurance policies follow the principle of good faith, that is, the insured must disclose all facts material enough for the issuance of a policy. In case the insured hides a fact, which is material to the assumption of risk by the insurers and it comes to light at a later date, an insurance company can cancel the policy or reject the claim depending on the circumstances. So, it is advisable to disclose all possible facts at the time of taking the policy and answer the questionnaire with complete honesty to avoid hassles at a future date.
Also, it is important to understand that you have taken a term insurance in which medical tests are conducted to check your fitness level and rule out the existence of any disease at the time of issuance of the policy.
Your current health status and family medical history has the impact of changing your premium amount but would not make you ineligible for life insurance. So, in your own interest, it is advisable that you disclose all facts to your insurance company.
I want to invest some money for my three-year-old son to meet his college expenses later. What insurance policy would you suggest that will give me maximum returns in this period to meet the expenses?
—SHAILENDRA, EMAIL