Are you a nominee of a life insurance policy? Here’s what you should keep in mind
A life insurance policy is perhaps one of the easiest products one can buy, what with insurance agents repeatedly spamming us with calls for the same. Given their convincing skills, most of us end up buying a policy. Now, while a good plan is ultimately going to benefit the policyholder and his/her nominee, what typically happens is that the policy becomes a one-person show. In simple words, it is the policyholder who is kept in the loop, with the nominee often relegated to the side.
Now, one might question the need for a nominee to be an equal part in the policy and its matters. True, most of us buy a life insurance policy to safeguard our loved ones, choosing to pay the premium on their own, handling all paperwork on their own. But one point which skips our minds is that purchasing insurance is a partnership involving a number of people, with the nominee as important as the policyholder.
So, if you have been selected as the nominee for a life insurance policy, here are a few points you should keep in mind to ensure the policy does justice to everyone involved.
1. Know that you are equally invested in a life insurance policy – Most nominees don’t even know that they have been selected by the policyholder. It is only after the demise of the policyholder that, they realise this. So as a loved one, if you know that your partner/family member is buying a life insurance policy, do go up to him/her and enquire about the nominee details. Ideally, the onus of intimating the nominee lies on the policyholder, but being a tad proactive can ensure that there is clear communication from both ends.
2. Know and understand the details of the policy – Once you are aware that you are a nominee, it pays to keep yourself informed about the details of the policy as well. From term insurance policy to whole life insurance to ULIPs, the market is flooded with a number of products, with each designed for a specific purpose.
For example, if the policyholder has chosen a whole life insurance policy, you as a nominee will be assured of a benefit on the demise of the policyholder. On the other hand, in case of a term insurance plan, you will receive a benefit only if the policyholder passes away during the policy term.
In addition to knowing the type of policy, you should know the premium amount being paid, the sum assured chosen, additional bonuses (if any), etc. This will ensure that you are not taken for a ride during an emergency.
3. Understand your duties as a nominee – Being a nominee is not merely about having your name mentioned in the policy document. As a nominee, it is important that you understand the duties that come with this tag. First, ensure that your details are entered correctly in the policy documents. If there are changes in either your name or address, get the same updated.
In cases where there are more multiple nominees, they should all be aware of the same. It is your duty as a nominee to figure out how many other people have been chosen by the policyholder.
Additionally, a nominee should ensure that the policyholder keeps the policy active. In case a policyholder has missed a premium payment, remind him/her to complete all payments before the grace period ends.
4. Know how to make a claim – Now, the demise of a loved one is extremely tough on us. Chances are that most people are in a state of shock during such periods. This often leads to instances where we forget to contact the life insurance company and update them about the demise of a policyholder.
As a nominee, ensure that you are aware of the claim settlement process of the insurer. Go through the policy document and check the procedure to raise a life insurance claim, ensuring that the money reaches you in time to meet any immediate financial commitments like making preparations for the funeral, etc.
Make sure that you have the documents required to make the claim. The documents typically include the original policy, your ID proof, death certificate of policyholder, etc.
5. Keep contact details handy – Last but not the least, as a nominee it is important that you keep the contact details of the insurance company handy. During an emergency, you might not find the time to go and search for the same. Saving the numbers or email ids beforehand can save time and energy in the future.
While a policyholder might have thought about the future of his loved ones while buying a policy, as a loved one you should also ensure that you do justice to the policyholder. Remembering these basic duties can eliminate unnecessary hassles during an unfortunate event.
Along with life insurance, it is important you purchase the right health insurance plan for you and your family members that would pay for the medical and surgical expenses incurred by the insured persons. Based on your needs, you can opt for a family floater or an individual health insurance policy.