A nominee is a person chosen by the insured to receive the sum benefit (and other benefits under the policy) in the case of his death . If a policy does not have a nominee, the sum assured will be paid to the legal heir (spouse, children and mother). It may, however, take longer than usual to receive the benefit as it involves legal procedures.

The policyholder can nominate any individual as the beneficiary, but in cases where it is someone other than the immediate family member, it usually results in a dispute, causing a delay in settlement of the proceeds of the policy, say legal experts. So, think twice before nominating anyone to receive the benefits of your life insurance policy.

A policyholder also has the option of registering multiple nominees for his policy. In such a case, the sum assured gets divided on a proportionate basis.

In cases where the nominee is a minor, an appointee or trustee should also be named.

One has the option to change the nominee any time during the term of the policy. Care should be taken to update the nominee in the case of marriage or death of the nominee.

Though the benefits of a life insurance policy is usually given to the nominee of the deceased, if the policy has been given as a collateral while obtaining a loan, the proceeds will go only to the lender. So at the time of death of the insured, the assignee will receive the benefit and not the nominee.

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