When you buy life insurance, you do so with the motive of securing your loved ones. A life insurance policy offers your family members financial stability in the form of a life cover. However, as a policyholder cum life assured in a self-proposed policy it depends on you to choose who gets this benefit. When you purchase your plan securing your own life, you are supposed to choose a nominee who will be paid the sum assured at the time of the claim as per the terms and conditions of the policy. Read on to know more about selecting a nominee in a life insurance policy.

What is a Nomination?

A nominee is a person who gets the sum assured as per the terms and conditions of your plan. This is generally a loved one like your spouse, child, parent or a sibling. Nomination refers to the process of picking out a nominee for your plan at the time of purchase.

How do you select a nominee?

You can pick any person as your insurance nominee. This can be an individual from your family or even someone outside of your family. Since this person is expected to get the death benefit in your absence, it may be advised to pay close attention to who you choose.

Here are some life insurance nominee rules:

1. Beneficial nominee

As per the Insurance Laws (Amendment) Act, 2015, if you select your immediate family members like your spouse, children, or parents as the nominee(s) for your insurance plan, they will be beneficially entitled to receive the claim amount over any other legal heir. In this case, your nominee will be known as a beneficial nominee. It helps to pick only close family members as your beneficial nominee since they get absolute right to claim the death benefit over anybody else as per law.

2. Minor nominee

A lot of parents who are policyholders appoint their children as their nominee. This is a great way to safeguard their future when you may not be around to do so yourself. However, if your children are below the age of 18, they will be a minor as per law. So, you would have to appoint a guardian to overlook the affairs of the claim and receive the proceeds under the policy on behalf of the minor nominee. If your children are below 18 at the time of settlement, the sum assured will be paid to the guardian/appointee for safekeeping. The day your children turn 18, the guardian is legally obligated to pay them the money.

Since, the future of children will be dependent on the guardian/appointee, it may be advised to appoint a trustworthy person as the guardian/appointee.

3. Non-family members as nominee

The meaning of nominee in insurance is not limited to your family. If you are unmarried or do not have any close relatives or due to any other reason, you may appoint a non-family member as the nominee. This could be a friend or even a distant relative. However, this non-family member as a nominee would receive the death benefit as a custodian and your legal heir(s) may seek a claim over the death benefit under the policy.

4. Selecting multiple people as the nominee

You can appoint multiple people as nominees for your plan. Most people take this option when they have more than one child or if they wish to distribute the sum assured among all their family members. If you choose this option, you can fix the percentage of the sum assured for each nominee.

5. Changing the nominee

You can change your nominee as per your suitability any time before the policy matures for payment. However, the last appointed individual as nominee will receive the claim.

6. No nominee

If you have not selected a nominee or if the nominee you selected has passed away other than a beneficial nominee, the death benefit under the policy shall be payable to your legal heir(s) or legal representative(s) or succession certificate holder(s) provided by a competent court. In case your beneficial nominee has passed away, the death benefit under the policy shall be payable to the beneficial nominee’s legal heir(s) or legal representative(s) or succession certificate holder(s).


Since it is the nominee who receives the benefits of a life insurance plan, it is crucial to choose someone who you trust and care for. It is suggested to update the nomination as per your changing life situations. In case of a divorce, death of a nominee or birth of a child, one must make needful changes in the policy documents to avoid any feuds or hassles for your loved ones later. Please note that the insurance company is obligated to pay the policy proceeds to the nominee(s) in case of death of the insured person/entity.


The governing section pertaining to nomination is section 39 of the Insurance Act to be read along with subsequent amendments and the above explanation is solely for illustration and ease of understanding.


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