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Mumbai, August 15, 2020
As we all know, term insurance is one of the most affordable life insurance products available in the market. The policy is an ideal way to secure the financial future and aspirations of your family members after your death.
In the event of your untimely demise, the insurer will pay a lump sum benefit to the beneficiaries of the policy. Hence, when you buy a term insurance plan, it is mandatory to enlist beneficiaries/nominees to the account.
Benefits of Enlisting Nominees
The benefits of enlisting nominees at the time of buying term plan are explained as follows:
It serves the purpose of buying a term insurance plan. The policy is purchased with an objective to protect your dependents in your absence. Hence, after your death, the death benefits will be given to the enlisted beneficiaries.
The policy gives you the liberty to choose one or multiple people as beneficiaries. It is advisable to elect a responsible person who will take care of the family in your absence.
As mentioned earlier, you can choose multiple nominees. If one of the nominees dies during the policy tenure, at least there is another person to receive the death benefits upon your death.
The death benefit can be shared among the beneficiaries. You (the policyholder) have the liberty to enlist multiple nominees and allocate the benefit amount as per your wishes.
Any cancellation or changes in the nominee list can be made numerous times.
Details Required When Enlisting The Nominees
The following information of the beneficiaries should be submitted to the insurer -
Your relationship with the nominee
Supporting documents as proof for the above details are to be submitted with the insurer as well.
What Happens If No Nominee Is Enlisted?
If you do not enlist any beneficiary when buying the term insurance plan, the following rules will be applied when executing your insurance after your death.
The insurer will pay the death benefits to the Class I legal heir. The following people qualify as Class I legal heir:
In case you have a legal will in place, the following procedure will be followed -
The insurance plan will be processed as per the Indian Succession Act of 1925.
The insurance amount will be distributed as per the will agreement.
The court will issue a succession certificate. As per the court’s decision, the insurance payout will be distributed among the surviving dependents.
The Bottom Line
With this, you must have understood the importance of enlisting a beneficiary in your term insurance plan. If you want the financial future and aspirations of your loved ones protected, make sure you add them to the nominee list.
Also, choose the right coverage amount when buying term insurance in India. You don't want to leave your family with insufficient finances as it can throw them in a financial turmoil.
Use a term insurance calculator to determine the premiums that you will have to pay for the needed coverage. By doing this, you will be able to manage your finances better and secure your family with a high sum assured.
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