A term insurance policy is an ideal tool for protection of your family at a time when you cannot provide for them. When subscribed to a life cover, your family members will get the insured sum if something unfortunate ever happens to you. It will keep your family financially stable, and it will help them pay off the debts and liabilities.
What is a nominee in a term insurance policy?
A nominee is person who will receive the death benefits of a term insurance plan if the insured unfortunately passes away. One of the most important factors in making sure your family adequately get the life cover is to make sure you choose the right nominee. Your nominee has the complete discretion in deciding how to spend the money they get and only the right person can make sure your family members get the required protection.
Below are a few pointers what will help you make sure you choose the right person as nominee –
- Make sure the person is a family member – It is critical to make sure your nominee is a family member of your immediate family. This way, claiming your life cover would be easier and you can make sure your money doesn’t go outside of your family.
- Make sure the person knows how to handle the money – Most of the times, the sum insured that the nominee would get when they claim will be significant. Hence, it is very important to make sure your nominee has experience handling such an amount of money. People could get carried away with a large sum and they could make bad investment decisions. It is important here to educate your nominee on how to spend or use the money, even if the conversation could get tough.
- Make sure your family knows who the nominee is – The news of who the nominee of your term insurance policy is shouldn’t shock your family at the last moment. Talking about a demise or process of claiming a term insurance policy could get difficult, but it is important that this communication is done to ease the process if there is ever a need to claim. For that, it’s ideal to make sure all your family members know who the nominee is and approve of them to handle a huge sum of money towards the welfare of the family.
Who should be your nominee?
A term insurance means protection of your family in a dire situation. So, the choice of nominee should depend on your family’s peculiar situation and financial status. Below are some suggestions that could help you according to your family scenario –
- If you are in your 20s and unmarried – At this stage, your parents should be your default choice. This makes sure they are protected if you are also a providing member of the family.
- If you are in your 20s and married – You could choose either one of your parents or your spouse at this stage. Ideally, it should be whoever who is more depended on your income.
- If you are married and have children – It’s ideal that your spouse handle insurance money, if they ever have to, at this stage. If your children are under the age of 18, it could bring about a lot of complications if they are the beneficiaries.
- If you are a single parent – In this situation, the ideal nominee is your children. If your children are under 18, there are laws in place that will make sure they get adequate funds till they become adult.
- If your children are adults – It’s ideal to make your spouse your term insurance’s nominee in this scenario, especially if your children are living on their own.
How to add a nominee in a term insurance policy?
You will get the option to choose a nominee at the time of buying an insurance policy itself. Hence, it is important that you come to a decision regarding the same before buying.
If you are confused still, may be an insurance expert could help you. Expert advisory is available easily through most insurance websites these days. An expert will consider your particular situation and give you the best choices to choose from.
If you are not insured yet, reach out to an advisory, use tools like term insurance premium calculator and get insured today!