How to Change a Nominee in Term Insurance: A Complete Guide for Policyholders
Term insurance is a powerful tool to safeguard your family’s financial future in case of an unfortunate event. But the benefits of the policy may never reach your loved ones if the nominee details are incorrect or outdated.
If you’ve ever wondered how to change a nominee in term insurance, this comprehensive guide walks you through the process, whether you're with LIC or any private insurer, and shares important things to keep in mind.
Table of Contents
What Is a Nominee in Term Insurance?
A nominee is the person you appoint to receive the death benefit from your term insurance policy in the event of your passing. In other words, the nominee is the legal beneficiary of the policy payout.
When you buy a term insurance plan, you can name one or more individuals as nominees. You can also update this nomination at any time during the policy tenure.
Who Can Be a Nominee?
According to IRDAI (Insurance Regulatory and Development Authority of India), nominees can be:
- Immediate family members (spouse, children, parents, siblings)
- Extended relatives (uncles, aunts, cousins, etc.)
- Minors (must have a legal guardian mentioned in the policy)
- Non-family members, with insurer approval
Nominees must be mentally capable, have an insurable interest in your life (i.e., suffer financial loss upon your demise), and must be legally eligible to receive benefits.
When Should You Change a Nominee in Term Insurance?
Here are some common life events that might require you to update your nominee:
- Death of an existing nominee
- Divorce or strained relationships
- Marriage, birth of a child, or other family changes
- Change in financial dependency
- Revisions in your estate or inheritance plans
- Concerns over the nominee’s financial stability
- Legal disputes or conflicts in the family
Keeping your nominee information updated ensures the death benefit reaches the right person without legal hurdles.
How to Change a Nominee in a Term Insurance Policy (LIC or Any Insurer)
Changing your nominee is easier today with most insurers offering online options. Follow these five steps:
Step 1: Contact Your Insurance Company
Reach out via customer care or email to request a nomination change. Some insurers have specific rules you may need to follow.
Step 2: Download the Nomination Change Form
You can typically find this form on the insurer’s website or app. Some companies allow you to submit it digitally, while others may require a physical form.
Step 3: Prepare Required Documents
These usually include:
- Policyholder’s ID proof
- New nominee’s ID proof
- Proof of relationship (e.g., birth certificate, marriage certificate)
- Original or copy of the policy document
- For minors: guardian’s ID proof and signature
Step 4: Submit the Form and Documents
Submit the completed form with documents through the specified channels. Once submitted, you’ll receive an acknowledgment receipt, this confirms your request has been received, but is not an approval yet.
Step 5: Await Confirmation
The insurer will verify your request. If approved, your policy records will be updated. If rejected, the insurer must provide valid reasons, and you can reapply after making necessary corrections.
Key Things to Keep in Mind When Changing a Nominee
Changing a nominee is more than just a formality, it can directly impact your family’s financial security. Consider these important points:
1. Understand the Terms & Conditions
Each insurer has specific rules about nominee eligibility, especially for non-family members. Always read the nomination clause in your policy document.
2. Choose Thoughtfully
Don’t change nominees frequently unless needed. Think long-term — consider your marital status, dependents, and financial obligations before finalizing a nominee.
3. Communicate Your Decision
Inform the new nominee and your family members. This helps them be prepared during a claims process and avoids confusion or delay.
4. Submit Correct Documentation
Errors in ID or relationship proofs can create problems during the claim settlement. Double-check all documents before submission.
5. Review Nomination Periodically
Make it a habit to check your policy details annually, especially after major life events like marriage, childbirth, divorce, or loss of a loved one.
Changing a nominee in your term insurance policy might seem like a small task, but it's crucial for ensuring the financial protection of your family.
A well-planned nomination ensures that your insurance payout goes to the right person, at the right time, without legal complications. Take time to review, update, and communicate your decision, and revisit your nomination details every year or whenever your life circumstances change.
