Nominate the right person for your life, health and pension plans

Appointing the right nominee for your insurance and pension plans is as important as purchasing or investing in them because these products help secure the financial needs of your dependants.

“There have been cases where people have made brothers, sisters, cousins and friends as their nominees and legal heirs like spouse and children have not received any benefit from the life insurance policies of the deceased, leading to court cases between the nominees and legal heirs,” said Mahavir Chopra, director-health, life and strategic initiatives, Coverfox.com.

Insurance

While buying a life or health policy, make sure you don’t miss out mentioning the nominees in the proposal form, just because it’s not mandatory to do so.

Mention the names and relationships with nominees to make the claims process smoother.

Read: Caring for family after you are no more

The Insurance Regulatory and Development Authority of India (Irdai) amended the Insurance Act, 2015 to create a category called “beneficial nominee”. Your spouse and blood relatives such as children and parents automatically become beneficial nominees. This way the insurer can make the payment at the earliest possible.

Read: Why it’s essential to make a Will

“It is best to complete the nomination activity at the time of filling up the life insurance proposal form. There can also come a time when the nominated person is no more. Hence, the insured would have to nominate another person to receive the benefits of his policy,” said Chopra.

Nominees must inform the insurer at the earliest and submit death certificate, age proof, original copy of the insurance policy, and nominee identity proof, in case of a natural death. If the death has occurred due to an accident, copies of the FIR and the post-mortem report must be submitted.

Read: Inheriting a property is not enough, proper transfer of its title in your name is a must

In case of health insurance where the insured dies after hospitalisation, nominees can claim reimbursement by submitting medical bills, death certificate, identity and relationship proof. For group policies, nominees can be declared at the time of the policy issuance and payouts happen accordingly. “If the nominee is not declared upfront in a group policy, the legal heir of the employee can claim the amount,” said Abhishek Bondia, principal officer and managing director, SecureNow.in.

Read: Having joint holders can make transfer of MFs, stocks simpler

Pension Plans

In case of National Pension Scheme (NPS), the subscriber is required to appoint three nominees and specify the percentage of savings for each. The nominees can be changed at any point.

In case a nominee is not alive, the legal heir of the deceased can claim the corpus by producing a certificate or affidavit confirming legality. The legal heir can then approach a point of presence (POP) with which the NPS account of the subscriber is associated and submit the required documents such as original Permanent Retirement Account Number (PRAN) card, legal heir certificate, cancelled cheque and claim form.

“After these documents are processed and verified, POP sends the information to the Central Recordkeeping Agency where the request is executed,” said Sumit Shukla, CEO, HDFC Pension Management Co. Ltd. “Nominee or the legal heir should ensure that all the documents are submitted as per the requirement of the service provider. This would ensure smooth processing and faster transfer of funds.”

Read: How to file ITR of deceased, surrender PAN and Aadhaar

In case of Employees’ Pension Scheme (EPS), the nominee or the legal heir needs to produce her bank details and the death certificate of the subscriber to the Employees’ Provident Fund Organisation (EPFO).

Read: Secure banking assets, but settle liabilities too

However, remember that a subscriber is eligible to get EPS corpus only if she has contributed to the fund for at least 10 years. “In case a member ceases to be a subscriber to EPS before completion of 10 years, the contribution to EPS lying to the credit of the member will be settled along with the EPF claim, subject to minimum contribution to EPS for at least six months,” said Rituparna Chakraborty, executive vice-president and co-founder, Teamlease Services. It’s best to keep your spouse and family informed about the processes involved.