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Features
Ref. No. KLI/22-23/E-BB/492
Nomination in insurance is crucial for policyholders, as it involves designating individuals or entities to receive benefits in case of the policyholder's demise.
Nomination in insurance is a vital aspect of financial planning that ensures the intended beneficiaries receive the benefits seamlessly. Understanding the process and considerations associated with nomination helps policyholders to make informed decisions, safeguarding the financial well-being of their loved ones.
As part of responsible financial management, policyholders are encouraged to regularly review and update their nominations to align with changing life circumstances and evolving relationships. In essence, the nomination is not just a procedural requirement but a compassionate act that facilitates a smoother transition of financial support to those who matter most in times of need.
Nomination in insurance refers to the act of appointing someone as the beneficiary (nominee) who will receive the policy proceeds in the event of the policyholder’s death. This process ensures that the insurance policy’s benefits are seamlessly transferred to the nominated individual(s) without unnecessary complications.
A nominee is a person who holds the property of the deceased until he has to distribute this property to the legal heirs. In a life insurance policy, the beneficiary is an individual you nominate to receive the policy proceeds after an unfortunate incident occurs. One policyholder can designate more than one beneficiary and mention their share in the policy proceeds.
Your life insurance policy allows the nomination of individuals falling into the following categories:
Legal heirs: Nominate your legal heirs, such as children or spouses, to ensure they receive the insured sum and can safeguard the financial future of the person you wish to secure.
Immediate family members: Designate your parents, siblings, or other family members as nominees. They can receive and manage the insured sum for the person you aim to protect financially.
Extended family members or Friends: Nominating cousins, relatives, or friends is possible. However, approval from your insurance company is necessary to appoint such a nominee.
Understanding the various types of nominees in insurance is crucial for policyholders making decisions about their beneficiaries. In the realm of insurance, different categories of nominees cater to specific needs and circumstances. Here’s a breakdown of the key types of nominees and their significance:
General Nominees: Individuals designated without specifying a share in the benefits.
Specific Nominees: Designated individuals with a specified share in the benefits.
Successive Nominees: Nominees nominated by other nominees, ensuring continuity.
Contingent Nominees: Individuals appointed to receive benefits if primary nominees are unable.
In the vast world of insurance, the terms “nominee” and “beneficiary” often coexist, yet they represent distinct roles in the claims and benefits process.
| Aspect |
Nominee |
Beneficiary |
| Definition |
An individual appointed to receive assets or benefits on behalf of the deceased. |
A person entitled to receive assets or benefits from a policy, will, or trust. |
| Role |
Primarily responsible for receiving the assets and ensuring their distribution to other heirs or as per the deceased’s wishes. |
Directly entitled to inherit or receive benefits, often with fewer obligations than a nominee. |
| Appointment Process |
Appointed by the account holder, policyholder, or testator in the relevant documents. |
Designated by the account holder, policyholder, or testator in legal documents such as a will, insurance policy, or retirement plan. |
| Types |
Can be appointed for various assets, including bank accounts, investments, and properties. |
Commonly associated with insurance policies, retirement plans, wills, and trusts.
|
| Succession Planning |
Nominee roles may not be passed on to the nominee’s heirs; the deceased’s instructions or legal procedures prevail. |
Beneficiary designations can involve secondary beneficiaries, ensuring a smoother transfer of assets if the primary beneficiary is unable to receive them. |
Nomination in insurance is a critical component of financial planning, ensuring that the benefits reach the intended recipients when they are most needed. By comprehensively navigating the nomination process, policyholders can contribute to the financial security and well-being of their loved ones. Regular reviews and a clear understanding of the different aspects of nomination empower individuals to make informed decisions, reinforcing the protective shield that insurance aims to provide.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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