Select the right nominee

Nomination helps women ensure that the proceeds of the policy go to the desired person.

Print Edition: February 5, 2009

Nomination vs Assignment
Nomination allows the proceeds of the policy to reach the beneficiary named by the policyholder. Assignment, on the other hand, is a process by which the policyholder (assignor) can transfer his rights to another person (assignee) through a deed. The assignee acquires the complete title of the policy and has the power to sue. He can also reassign or surrender the policy. However, the assignment must be in writing and a notice to this effect must be given to the insurer.

When an insurer conducted a consumer research some years ago, the findings were disconcerting: women had declined to take life insurance because they felt their husbands would profit from the policy if they were to die. To ensure that the proceeds or benefits go to the desired person, it is important to go through the process of nomination carefully when signing the policy.

A nominee is the person who receives the benefits when the policyholder, or the person who buys life insurance, dies during the term of the policy. The nominee is to be appointed at the time of buying the policy and the beneficiary can be changed at any time during the term of the policy.

Life insurance policies are long-term contracts and the benefits are more complicated as they depend on the occurrence of pre-defined insured events. Nomination is the tool by which the policyholder can effectively manage the benefits accruing under a life insurance policy. It is the right given to the policyholder to appoint a person or persons to receive the benefits if it becomes a death claim.

For women, the selection of a nominee is especially difficult and is compounded over the different stages in their lives. For instance, before marriage, a woman is most likely to appoint one of her parents as a nominee. After marriage, she may change the beneficiary to her husband and later to her children.

It is not necessary for the nominee to be a relative. Also, the fact that he may or may not have any insurable interest means non-relatives can be appointed as nominees as they are not likely to suffer any financial loss if the policyholder dies. The role of the nominee comes into play only after the policyholder’s demise, thereby reducing his influence over the latter.

A policyholder can appoint multiple nominees and can also specify their shares in the policy proceeds. The details of the nominee typically include his name, age, address and his relationship with the policyholder. To change the nomination, all that a policyholder needs to do is fill up a standard form, cancel the name of the existing person(s) and replace it with the new one(s).

For women, this is an empowering tool as it helps ensure that the proceeds reach the rightful person after their demise and serves the purpose for which the policy was bought.

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