Nominee

A nominee is the person whom the policyholder has named to receive the insurance payout if the life assured dies. Nomination is a crucial administrative step — without a valid nominee, the claim amount becomes part of the estate and the family has to go through the succession process (probate, legal heir certificate, or a letter of administration), which can take months or years in Indian courts and can cause genuine financial hardship for dependents who need the money immediately. Indian law distinguishes between two types of nominees, and the distinction matters.

Under the Insurance Laws (Amendment) Act 2015, a 'beneficial nominee' — which must be a parent, spouse, child, or any lineal descendant — receives the claim money as the absolute owner, and no other heir can claim against them. A nominee who is not within this list is only a 'collector' who receives the money on behalf of the rightful legal heirs. Worked example: if you name your spouse as the nominee on a ₹1 crore term plan, she receives the full ₹1 crore as a beneficial nominee and the money is hers outright.

If you name a cousin as the nominee instead, the cousin is obligated to pass the money on to your legal heirs under succession law. A common misconception is that 'my will overrides my nominee'. In life insurance, for a beneficial nominee within the prescribed relationship list, the nomination is a direct grant — a will cannot override it.

For non-beneficial nominees, the will or succession law governs who actually keeps the money. Another common misconception is that nomination is a one-time decision. It should be reviewed at every major life event — marriage, birth of a child, a death in the family.

Insurers accept changes in nomination during the policy term and you should not hesitate to file them. For a minor nominee (under 18), IRDAI requires you to also appoint an 'appointee' — an adult who receives the money on the minor's behalf until they turn 18. Without an appointee, the claim payment gets delayed.

Related: policyholder, assignment, claim.