Understanding nominations in a life insurance policy

As per Section 39 of the Insurance Act 1938, as amended by the Insurance Laws (Amendment) Act, 2015, the policyholder may nominate the person or persons to whom he/she wishes to offer the accrued financial benefits in the event of the demise of the insured person. Therefore, it is important to understand the nomination process to ensure that your loved ones can take advantage of the policy without any hassle. 

Learn here everything you need to know about nominations under a life insurance cover. 

Type of nominees in life insurance policies

  •  Beneficial nominees

According to recent changes in Insurance Laws (Amendments) Act, 2015, if an immediate family member such as parents, spouse, or children has been made nominee, then they will be known as ‘beneficiary nominees.’ They will be the final recipients of the death benefits or any other monetary proceeds from the Life Insurance policy. It means that the insurer will pay the assured money only to the beneficiary nominee(s), and the benefits will not be distributed among other legal heirs.

  • Minor nominees

Many policyholders also appoint minors as nominees in insurance policies. However, children below the age of 18 are not considered eligible to handle the claim amount and the policyholder will have to assign a custodian for them. If there is a claim where the nominee is below 18 years, the claim will be paid to the custodian until the nominee becomes an adult.

  • Non-family nominees

Insurers do not allow strangers as your nominee. Hence, even if you want to nominate a distant relative or a close friend, it will be difficult to do so. Moreover, appointing a nominee who is not related to you is a moral hazard. The insurance company might refuse this nomination.

  • Changing nominees

Changing nominees are the ones whom you can change multiple times and the latest nominee will supersede all the previous nominees.

Why choosing the right nominee is important in life insurance policies?

The selection of the right nominee ensures that the insurance company knows who to pay the assured money after the demise of the policyholder. A proper nomination will not only enable fast processing of claims, but it will also help your loved ones to get the benefits of your policy when they need it the most and without any hassle. Thus, your small effort and diligence today will save tons of effort for your loved ones in the future.

What is the procedure to make a nomination?

In a life insurance policy, the nomination can be made either at the time of applying for the policy or later. If the policyholder wishes to make a nomination at the time of taking the policy, he/she can indicate his desire in the proposal form. However, nominations can also be done at any time after taking the policy. In that case, the policyholder is required to write out the wording of nomination on the policy bond, sign it and get it witnessed.

Can the nominee be cancelled or changed?

The nominees can be cancelled or changed at any point during the policy period. A policyholder has the right to change their nominee multiple times as per their requirement. To change the nominee, you need to download the nomination form from your insurance company’s website, or you can take it from the nearest branch office. Then you need to update the personal information of the nominee by filling the form and submitting it to the insurer. Once the nominee is changed, request your insurer for a written acknowledgment. It will leave no room for confusion when the nominee will file a claim.

What happens in the case of the nominee’s death?

If the nominee dies before the policy term is over, the insurance company will cancel the nomination. In this case, the policyholder needs to submit a new nomination to assign a person who will receive the policy proceeds. One thing you need to consider is that the nominee is eligible to receive the money only if the policyholder dies before the end of the policy term. In case the policyholder outlives the policy term, the insurance company will pay the maturity benefits directly to the policyholder. 

What you should remember while nominating an individual as your nominee?

While appointing a nominee under your life cover, you are required to provide correct details of your nominee including their full name, address, age, date of birth, and the relationship you have with them. Any incorrect information can create a problem while filing an insurance claim. Also, you get the flexibility to change nominee details at your convenience. But for this, you need to inform your insurer first.


Given the real purpose of life insurance, one cannot overlook the importance of appointing the right nominee. Therefore, make sure that you always choose the right person as your nominee. This will ensure that possible future disputes are avoided, and the money is paid only to those whom you want in your absence.