Table of Contents
- What Is Term Insurance?
- How to Change Nominee in Term Insurance?
- Benefits of Term Insurance
- How to Choose a Nominee
- Are There Any Charges for Changing Nominees in Term Insurance?
- Multiple Nominees
What Is Term Insurance?
Term life insurance is a type of life insurance policy that provides financial security to the beneficiaries of the policyholder in the event of their sudden death during the policy term. Unlike other life insurance policies, term plans do not offer any savings or investment options and are designed solely to provide life insurance coverage. The premiums for term plans are affordable, and they offer high coverage for the given premium amount. In the event of the policyholder’s death during the term of the policy, the death benefit is paid out to the beneficiaries or nominees listed in the policy. If the insured survives past the policy’s term, no benefits are given, and the contract expires.
Some term plans may offer the option to convert the policy into a permanent term insurance policy upon expiry. Overall, life insurance through a term plan provides a practical way to financially safeguard one’s loved ones in the event of an untimely demise during the policy term.
How to Change Nominee in Term Insurance?
To change the nominee in term insurance, you need to follow the below steps:
- Check the policy documents: understand the terms and conditions related to changing the nominee. Make sure the chosen nominee has all the documents and meets all the eligibility criteria.
- Fill up the nomination change form: Forms are available online as well as online. You can download the form and download it for your convenience or go to the branch office to get it. Fill out the form with accuracy and avoid mistakes.
- Provide necessary documents: You must provide important documents of yourself and your nominee that are asked in the form.
- Submit the documents: Check the form after filling it out and attach all the necessary documents with it. Now, you can submit the form in the branch or if you have filled it out online then send it via email if the company allows it.
- Wait for confirmation: Wait for approval from the company’s side after they receive your request. You may receive a confirmation receipt or letter that states that your request is confirmed and your nominee has been changed.
Pro tip- Keep all your important documents in a separate file and in an organized manner. Also, It’s essential to keep the nomination updated to ensure that the right person receives the benefits in case of any unfortunate event.
Benefits of Term Insurance
There are several benefits of term insurance, which include:
- Affordable premiums: The term insurance has a premium lesser than other types of insurance like whole life or universal life insurance.
- High coverage amount: Because of the affordable and low premium, term insurance allows a high coverage amount.
- Flexibility: Term insurance policy offers flexibility in selecting the coverage period. The coverage amount is also chosen and the riders or additional coverage can be selected according to the requirements.
- Tax benefits: The premiums paid for term insurance policies are eligible for tax benefits under Section 80C of the Income Tax Act. The death benefit received by the nominee is also tax-free under Section 10(10D) of the Income Tax Act.
- Peace of mind: Term insurance provides peace of mind by ensuring that your family is financially protected in case of your untimely demise. It can help your family meet their financial obligations and maintain their standard of living even in your absence.
How to Choose a Nominee
Choosing a nominee for your term insurance policy is an important decision, and it’s essential to choose the right person who can receive the death benefit in case of your unfortunate demise. Here are some tips to help you choose a nominee for your term insurance policy:
- Choose someone trustworthily
- Consider your family’s financial needs
- Keep the nominee updated
- Choose a backup nominee
- Check the legal requirements
In summary, it’s essential to choose a trustworthy and responsible nominee who can handle the death benefit and meet your family’s financial needs in case of your unfortunate demise.
Are There Any Charges for Changing Nominees in Term Insurance?
Most insurance companies do not charge any fee for changing the nominee in term insurance policies. However, it is always a good idea to check with your insurance company to confirm if there are any charges associated with the nominee change.
In some cases, the insurance company may charge a nominal fee for the nominee change. For example, if you request a physical copy of the nomination change form, the insurance company may charge a fee for the printing and postage. However, the fee is usually minimal and varies from company to company.
It’s crucial to note that you should only make a nominee change if it’s necessary and if you have a valid reason to do so. It is not advisable to make frequent changes to the nominee, as it can lead to confusion and delay in the payment of the death benefit in case of your unfortunate demise.
- When you purchase a term insurance policy, it is possible to name multiple nominees who will receive the death benefit in the event of your demise during the policy term.
- This feature is allowed by the Insurance Regulatory and Development Authority of India (IRDAI). It’s important to note that you can specify the percentage of the death benefit that each nominee will receive. For instance, you can designate that nominee A will receive 50% of the death benefit, while nominee B will receive the remaining 50%.
- However, it’s crucial to ensure that the total percentage of the death benefit allocated to all the nominees adds up to 100%. If you fail to specify the percentage of the death benefit that each nominee will receive, the benefit will be divided equally among all the nominees.
- Choosing your nominees carefully is paramount, especially if you have multiple nominees. While selecting them, you should consider their financial needs and relationship with you. It’s also essential to keep your nominees informed of any changes, such as a change in the percentage of the death benefit or adding or removing a nominee.