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How To Choose A Nominee For Your Term Plan?

How To Choose A Nominee For Your Term Plan?

Term plan nominee

A term insurance plan is one of the most important financial investments in your life. It provides your family with a financial security that no other investment can. It provides a large sum assured at a nominal premium amount.

If you opt for the Canara HSBC Oriental Bank of Commerce life insurance’s iSelect Star Term Plan, you can opt for a sum assured of minimum Rs.25 lakhs and pay your premium yearly or monthly. It also comes with the options of accidental death and accidental disability benefits, which will give your family added protection against medical costs.

One of the advantages of term plan is that it is possible for you to take one even at the beginning of your career when your earnings aren’t a lot. In return, your family receives a payout in the event of your demise within the policy term. For this purpose, you must nominate a specific person from your family.

Who is a nominee?

A nominee is a person who you officially appoint as receiver of sum assured of your term insurance policy while buying the policy. The process of appointing such a person is called nomination.

Why is nomination important?

Essence of insurance policy

The very essence of life insurance is leaving behind a financial cover for someone in the event of your death. This is fulfilled through nomination.

Ability to nominate anyone

Usually, policyholders nominate their spouse, children, or another family member as nominee for an insurance plan. Another one of the advantages of term plan is that you can nominate almost anyone. If you can prove insurable interest, you could also nominate a friend or a distant relative.

Multiple nominees

You can choose more than one nominee. In case the first nominee does not live out the policy term, the second one gets the benefit.

Shared benefit

You can also arrange for sharing of the death benefit amongst multiple nominees. In this case, the benefit can be shared between the appointed nominees according to the allocation decided by you.

Cancellation

Another important one of the advantages of term plan is that you are allowed to cancel and change your nominee as and when you want and how many ever times you want.

What should you consider before appointing a nominee?

Whether it is your spouse, sibling, or a friend, your nominee for term insurance should be someone who you absolutely trust with taking care of your family after your death. It should also be someone who understands the financial status of your family and can make wise decisions for expenses like education, marriage, etc.

What if a nominee for term insurance isn’t appointed?

In the case of no nominee being appointed or the appointed nominee’s death, there are two possibilities.

  • If the insured did not have a will, the sum assured plus bonuses are given to a Class I legal heir, which includes spouse, son, father, and mother.
  • If the insured has left behind a will, the death benefit is given to the successors as per the will. The process for this is explained in the Indian Succession Act, 1925.

What if a minor is appointed as nominee for term insurance?

It is a common practice to appoint a minor child as a nominee for an insurance policy. However, you also have to decide an appointee for the minor. The appointee will receive the money on behalf of the minor until the minor crosses 18 years of age.

What is an assignment?

Assignment for an insurance policy is made through a separate deed, and takes precedence over nomination. If you assign your policy to a person, it cannot be revoked. The assignee does not have to be an immediate family member.

What is a conditional assignment?

You can also opt for a conditional assignment instead of an absolute assignment. For example, say the insured has given their insurance plan as a guarantee for a loan, and they pass away before complete repayment of loan. In this case, the assignee will carry out the necessary procedure of repaying the loan through the insurance policy. Once the loan is fully repaid, the assignment is over.

What if there is a difference between policy nomination and will?

If the person mentioned in the policyholder’s will is different from the nominee, the will assumes higher importance and benefits are carried out as per the will. It is important to make sure that the will mentions the same nominee as the policy documents.

Only with a complete understanding of the procedure and implications of nomination should one appoint a nominee for term insurance. Now that you know most details, you should be able to make a more informed decision.

Speak to an insurance specialist now!

Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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