Why does a family’s breadwinner insure their life? The answer is simple: to reassure loved ones that if an unfortunate event takes away the primary source of income, financial support will still be available. However, without a nominee recorded in the insurer’s books, claim proceeds cannot be disbursed speedily, defeating the very purpose of life insurance.
Beyond being a financial product, life insurance is a promise to protect your family’s financial security in their most vulnerable moments. When a policyholder assigns a nominee—whether a spouse, child or parent—it gives insurers clear instructions on whom to pay in the event of death. This clarity reduces procedural delays and avoids unnecessary distress for grieving families.
Commitment and clarity
Registering a nominee ensures that the claim settlement process remains smooth, efficient and free from avoidable legal hurdles. It enables families to access crucial financial support at a time when emotional and financial pressures often coincide.
Nomination is not just convenient—it is also a legal requirement. The Insurance Act, 1938 mandates that every life insurance policy should have a nominee to bring clarity to the distribution of policy proceeds.
Over the years, lawmakers have strengthened the nomination framework to make it more transparent and policyholder-friendly. The Insurance Laws (Amendment) Act, 2015 introduced the concept of ‘beneficial nominees’. If immediate family members such as a spouse, children or parents are named, their claim takes priority over those of legal heirs or other claimants. This legal backing safeguards both families and insurers, ensuring the policy fulfils its intended purpose.
Keep it current
Life circumstances change—and so should nominations. Marriage, parenthood and other major life events alter financial responsibilities and dependents. It is essential to review and update nominations periodically to keep financial protection relevant.
After marriage, policyholders should ideally nominate their spouse. With children, the nomination can be suitably split between the spouse and children. When children become financially independent, one may again choose to name the spouse as the sole nominee. Failing to update nominations after major life changes can lead to disputes, multiple claimants and delays in claim settlement.
In such cases, insurers may be compelled to pay policy proceeds to a court-authorized legal heir. Worse still, if pre-marriage nominees receive the policy benefits, immediate family members may be left without financial support.
Planning responsibly
While the emotional void caused by one’s absence can never be filled, financial preparedness can provide dignity and security to families during difficult times. Life insurance is ultimately about peace of mind.
Assigning a nominee ensures that savings accumulated over years of hard work serve their intended purpose—supporting loved ones when they need it most. Policyholders should also inform nominees of their inclusion, so they know where to turn for help and avoid confusion or delays during claim settlement.
Registering a nominee is a legally sound and financially prudent step. It helps policyholders leave behind not just insurance cover, but a legacy of protection and care for their families.
Kamlesh Rao, chairperson, Insurance Awareness Committee (IAC-Life) & Parag Raja, member, Insurance Awareness Committee (IAC-Life)
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