- As a policyholder you have certain rights and duties towards your policy
- Your nominee also has several rights and duties
- The Insurance Laws Amendment Act (2015) has introduced the concept of beneficial nominee
- You can also appoint a minor as a nominee. In such a case, you require to have an appointee
As a policyholder, you have certain rights and duties towards your policy. Your nominee, the person who will receive the assured money in case of your demise during the policy period, also has rights and duties to perform for a smooth claim settlement. Read on to know more about these rights and duties.
- What are My Rights as a Life Insured?
As a policyholder, you have the following rights:
- Once you fill the proposal form, you should hear from your insurer within 15 days about the decision to issue or refuse the grant of life insurance
- If your proposal is accepted, the policy bond should reach you within a reasonable period of time
- You can cancel your life insurance policy within 15 days from the date of receiving the policy documents.
- You can ask for altering the mode of premium paid and the term of policy
- In case of loss of the policy document, you can get a duplicate copy that confers the same rights as the original policy except 15 days Free Look period.
- You can change the nominee details once the policy is issued by intimating your insurer
- You can appoint one or more nominees. When you do so, the sum assured will be divided among them
- Whom Can I appoint as a Nominee for my Life Insurance Policy?
You can appoint any person close to you as your nominee. Ideally, the person should be able to make a judicious use of the sum assured received to help your family stay financially independent. Your nominee can be your spouse, parents, children, or relatives. The new rules under the Insurance Laws (Amendment) Act 2015 have brought clarity in appointing a nominee, eliminating chances of disputes among family members over receiving death benefits.
Before the enactment of the new rules, your nominee was supposed to receive the life insurance money and distribute it among your legal heirs. The amended act has introduced a concept of beneficial nominee.
You can also nominate more than one person as a nominee. In such cases, you need to mention the share (%) for each nominee.
- What’s the Concept of Beneficial Nominee?
The amended act has introduced a concept of beneficial nominee that includes your immediate family members only - spouse, parents, or children. The new rules state that if you make any of your immediate family members as a nominee, he/she is entitled to receive the death benefit from your life insurance policy. Other legal heirs cannot claim on the money. Also, you can name various nominees for your life insurance policy and outline the exact contribution from the proceeds.
The new rules give rights to your nominee to receive the money on maturity of your life insurance policy in the event of your demise before receiving the corpus. Before enactment of the rule, your nominee could collect the sum assured only in the event of your demise during the policy term and not if you survived till maturity, but passed away before getting the maturity amount. Thus, the new rules bring the much-needed transparency in appointing a nominee, entitled to receive the benefits from life insurance policy.
- Can I Appoint a Minor as a Nominee?
Yes, you can. However, in this case, you need to list an ‘appointee’ to receive any claim paid in case of your demise during the policy period while the nominee is a minor.
You need to specify the minor's date of birth, name of his/her appointee and the nature of the relationship with the appointee. You can instruct the appointee directly or through a Will to take care of the sum assured received.
- What if My Nominee Passes Away Before Me?
In such as a case, you need to make a fresh nomination.
- What are My Duties as a Policyholder?
As a policy holder, you have these duties:
- Fill up the proposal form correctly
- Don’t hide any information, however immaterial it may seem
- Pay premiums on time
- Inform your life insurance company immediately if you lose your policy documents
- Don’t disclose your policy number and other confidential information to imposters identifying themselves as IRDAI officials. IRDAI never makes such calls.
- What are the Rights and Duties of My Nominee?
Your nominee has the following rights:
- Receive the sum assured in case of demise of the policyholder
- Know the policy benefits and the claims procedure
- Know about the policy whereabouts
The duties include:
- Intimating the life insurance company about claim
- Presenting the original documents during claim settlement
- Comply with the insurer during claims
Life insurance is a contract governed by the principle uberima fides i.e it is a contract of utmost good faith.. Being aware of your rights and duties go a long way in making the best use of your policy to cushion your dependents from financial risks.
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