Term insurance is a form of life insurance that covers you for a set duration. However, in the event of the policyholder’s demise during this term, a death benefit is paid to the nominee from the insurance company. It is recommended to have a nominee in a term insurance policy, since it will help him/her stay financially secure in case of the policyholder’s demise.

Understanding the Role of a Nominee for Term Insurance

 In the case of term insurance, the nominee is the person(s) as decided by the policyholder who will receive the death benefit in the event of the death of the policyholder. The nominee will also have responsibility in this case to furnish documen- tation and proof of the policyholder’s death. Alternatively, it can also be done by an authorized legal heir or executor of the deceased’s estate.

• Legal Rights of a Nominee

Here is a brief glimpse of the legal rights of a nominee for term insurance.

• Right to Claim the Sum Assured

The sum assured is the amount that will be paid to the nominee when the life assured dies. The nominee has the sole right to claim the proceeds if he/she is the sole legal heir. 

• Right to Information

Among other things, nominees will have the right to full disclosure of insurance policy details in case the policyholder specifies them and also if they are the legal heir. For this, they can obtain all the necessary documents and details related to the insurance, including policy terms, coverage amount, claim process, etc.

Claims Process for Nominees

• Intimation of Death

The first step in the claims process is informing the insurance company about the policyholder’s death. The nominee needs to provide a death intimation, which includes basic details about the deceased and the policy. This can often be done online or by visiting the insurance company’s branch.

• Submission of Claim Form

The nominee must fill out a claim form provided by the insurance company. This form requires detailed information about the policyholder, the circumstances of death, and the nominee. Along with the claim form, additional documents such as the death certificate, policy documents, and nominee's ID proof must be submitted.

• Verification Process

Once the claim is submitted, the insurance company undertakes a verification process to ensure the legitimacy of the claim. This includes verifying the documents and, in some cases, investigating the cause of death. The insurance company typically follows a set timeline for this process, but it can vary based on the complexity of the claim.

• Claim Settlement

After successful verification, the claim is settled, and the sum assured is paid to the nominee. The claim settlement timeline, as mandated by the IRDAI (Insurance Regulatory and Development Authority of India) is 30 days from receiving all necessary documents. In case any additional investigation is required, it should be done within a period of 90 days. If the claim is denied or delayed, the nominee can follow up with the insurance company or seek legal recourse.

• Legal Recourse for Nominees In Case of Dispute

In case of any disputes regarding claims, the nominee may approach the insurance ombudsman for resolution. However, it is only possible if the claim amount is within Rs. 30 lakh. The ombudsman is the neutral party for resolving disputes between insurance companies and policyholders or their nominees. In case any such issue remains unresolved, the nominee may file a case in the consumer court for further legal action. Alternatively, for claim amounts that are higher, nominees will have to approach the consumer or civil courts at the outset for legal recourse.

Conclusion

Understanding the rights and responsibilities of a nominee in a term insurance policy is vital. Nominees have the legal right to claim the sum assured and access policy information. Policyholders should ensure that their nominees are well-informed about the claim process and their entitlements. This knowledge empowers nominees to effectively manage claims and secure the financial future of their families.