How to Change Nominee in Term Insurance Plan?

Written by : Knowledge Centre Team

2025-11-02

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The core purpose of life insurance is to provide financial security and peace of mind to those dependent on you. However, if the nomination is missing or not updated, the exact opposite happens. In case of your unfortunate demise, your loved ones will have to struggle to claim the benefits. Absence of proper documents will only complicate and lengthen the process making it inconvenient for all. All this when the family is already grappling with the emotional loss. In the absence of nomination, the insurer may pay the amount to legal heirs or as per available will/testament. The insurer may also seek a succession certificate which only adds to the overwhelming number of tasks. An incorrect or missing nomination can lead to further trauma to your family at a time when they need empathy, love, and support. Let’s understand the importance of nomination, when to update it, and how you can easily make changes to avoid future hassles.

Key Takeaways

Insurance nominees are "beneficial nominees" with right to receive amount in full
Always keep nomination information current in light of evolving life circumstances
Multiple nominees can be appointed with benefit shares defined
e-Insurance Accounts ease nominations and record management
Inaccurate or out-of-date nomination could delay settlement of claims and result in legal disputes

Change Nominee in a Term Insurance Plan

In banking, nominees are simple custodians to claim the amount and distribute the same as per the will or to the legal heirs. In case of insurance, nominees are actually “beneficial nominees” because they are not required to distribute the amount. The nomination on an insurance policy supersedes all wills/testaments/legal heirs.

You must think thoroughly before appointing someone as a nominee on your insurance policy. The nominee should be a person who will be financially affected because of your demise. In most cases, appointing distant relatives or friends is not allowed unless you are able to clearly prove insurable interest.

Why is Nomination Important in Term Insurance?

A nominee is the person designated to receive the policy benefits after the policyholder’s demise. As per the amended law of 2015, the beneficiary nominee is the person who receives and keeps the money received from an insurance policy.

Under this act, if you nominate an immediate family member, they become the beneficial nominee and receive the insurance payout directly. Unlike earlier, they don’t need to distribute it among other legal heirs, and such settlements cannot be challenged.

Hence, always keep your nominee details updated to ensure benefits reach the intended person. Failing to update nomination details may result in:

Claim amounts being distributed to legal heirs instead
Requirement of a succession certificate
Delays or denial of claim settlement

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Can you Nominate Multiple People as Nominees in the Same Life Insurance Plan?

You may not only appoint multiple nominees but also mention the percentage of benefits you want each of them to receive. For example, if you nominate your father, spouse and son as your nominees, you may allocate 40% each to your father and spouse and the balance 20% to your son. This option is useful if you want different people in the family to get monetary benefits so that no one is left without support.

Why Should You Change Your Nominee?

Life circumstances keep changing, and so do your responsibilities. You may need to update your nominee if:

You get married and want your spouse to be the nominee instead of your parents.
You have children and wish to secure their future directly.
The existing nominee has passed away or you are no longer in contact with them.
You want to add multiple nominees and define specific share percentages for each.
You wish to change your nominee after a divorce or major family change.

Changing your nominee ensures that the death benefit reaches the right person without legal complications, keeping your family’s financial planning aligned with your current life situation.

Things to Keep in Mind While Changing Your Nominee

There are various things that you should take note of when you shift your nominee. A key decision that will be of necessity is to change your nominee to ensure the person that is supposed to benefit your life insurance package does not face legal tussles and delays as this person ascends to handle your life insurance benefits. Nevertheless, there are some issues you should remember prior to taking the process.

To begin with, never fail to provide your new nominee with policy details, i.e., policy number, the name of the insurer and the claim process. Most families also experience delays in claims as they do not even know that there is a policy.
Secondly, one should know the distinction between a beneficial nominee and ordinary nominee. In case you are nominating an immediate family like spouse, children, or parents, they become beneficial owners of the amount claimed. But in case you name someone who is not directly related to you, then that person is deemed merely a trustee to get the amount on behalf of your legal heirs. This is very essential in order to avoid conflicts.
Thirdly, in case you wish to appoint a minor as a nominee, you will have to write about an appointee or guardian in the nomination form. This will make sure that the claim amount is kept under a responsible capacity till the nominee reaches legal adulthood.
You should also review your nomination details regularly when something significant happens to you, such as a marriage, birth of a child or divorce. Retention of old details of a nominee may cause unintentional difficulties to your family when the claims are being settled.

How to Change Nominees in Term Insurance Plan?

You can change nominees anytime during the policy term. You can contact the nearest office of the insurance provider or connect with the online support for the step-by-step process. This option is provided by all insurers, and the latest nomination is considered valid and supersedes all the earlier nominations. There is no limit on the number of times that you can update the nomination details. The broad steps are listed below:

Choose an online or offline application
If you choose a physical copy, fill and submit the same at the nearest branch
If you are filling online, complete the form and submit
Ensure you have clear details of the new nominee
Insurance companies then acknowledge receipt of application via a letter or an email.
This acknowledgement should be kept safely for records.

The electronic insurance account (e-IA) is useful in managing nominations. The “Authorised Representative” can check the latest status and nomination in the e-IA and coordinate with the insurer in case of demise of the insured.

As per IRDA, e-IA stands for e-Insurance Account or “Electronic Insurance Account” which will safeguard the insurance policy documents of policyholders in electronic format. This e-Insurance account will facilitate the policyholder by providing access to the insurance portfolio at the click of a button through the internet.

What are the Benefits of an e-IA?

No more physical policy documents
View and manage all your life insurance policies under a single account
Changes in contact details once updated with the repository, gets auto-updated in all your policies across all life insurers
Opening e-IA is free

IRDA has granted the Certificate of Registration to the following four entities to act as 'Insurance Repositories' that are authorized to open e-Insurance Accounts.

Karvy Insurance Repository Limited
CDSL Insurance Repository Limited
CAMS Repository Services Limited
NSDL Database Management Limited

The “authorised representative” and “beneficial nominee” can be the same in an e-IA, although the discretion to choose either is left to the policyholder.

Final Thoughts

Keeping your nominee details updated in your term insurance policy will assist your family members in receiving monetary help on time without any legal issues. The amended act has simplified the nomination and assignment processes, thus giving you greater ease and peace of mind.

With guidance and customer support from Canara HSBC Life Insurance, you can easily manage and update your nominee details anytime, ensuring that your family remains financially secure even in your absence. Choose the right nominee today to safeguard their tomorrow.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.