A person's life and property are surrounded by the threat of death, injury, or loss. These dangers could lead to financial losses. Insurance is a sensible way to pass certain risks to a third party. A Life Insurance Policy is an agreement with a corporation in which you pay a certain sum of money on a monthly basis and the insurer promises to cover your expenses if you die, become sick, or hurt anything.

An investment, on the other hand, is a commodity or object that is bought with the expectation of earning money or will be in value in the future. An investment is a current outlay of some asset (time, money, effort, etc.) with the goal of a higher return in the future than what was initially invested.

What is a Nominee?

A nominee is a person or a corporation whose name is titled on securities or other property in order to facilitate transactions or transfers, while keeping the original customer's position as the actual or legal owner. A nominee may act as a custodian in this way.

A nominee account is a form of account in which a stockbroker keeps shares belonging to clients in order to facilitate buying and selling to keep the shares secure. Shares are said to be kept in street names in such a situation.

The candidate guarantees that the Life Insurance Policy provider knows to whom the guaranteed money will be paid after the policyholder's death. In the absence of a proper appointment, different factors decide who the true beneficiaries are.

The policyholder of a life insurance policy may designate the individual or persons to whom the money secured by the policy shall be paid in the event of death, as per Section 39 of the Insurance Act 1938, as amended by the Insurance Laws (Amendment) Act, 2015. This nomination can be made before the policy is issued or at any point before the policy is due to be paid. When the nominee is a minor, the policyholder must nominate someone to collect the money on behalf of the nominee according to the insurer's laws.

Nominating an immediate family member is often a good idea to avoid potential conflicts between the candidates and legal heirs. A policyholder has the option of changing the candidate as much as he or she wants. The most recent candidate, however, takes precedence over all others. Often change the insurance policy at the time of nomination to prevent later conflicts. It is important to make your loved ones a nominee for your insurance and investment. Let's see how!

Benefits of highlighting a nominee for insurance

While processing a death claim, the policyholder may nominate a nominee or nominees to obtain death benefit through the nomination facility. Along with the death allegation, the amount guaranteed plus any available bonuses would be paid.

• Serves the function of insurance: The nominating facility is used to fulfil the primary goal of life insurance. The policyholder's interests are covered by the insurance contract. The beneficiary or candidate retains the financial gain in the event of the policyholder's untimely death. After the death benefit is paid, the contract comes to an end.

• Nomination of someone: The policyholder has the option of naming someone as a candidate. The policyholder should preferably select a responsible person in whom he or she has complete confidence to meet the family's needs while he or she is away. If the policyholder can demonstrate an insurable interest, a candidate can be chosen from among friends or distant relatives.

• Nomination of multiple individuals: The policyholder has the option of nominating multiple people. Nominee B earns the death benefit if nominee A does not survive the policy term.

• Death benefit sharing: The death benefit may be split among the candidates. The policyholder may distribute the death benefit to several nominees, in which case the death benefit will be distributed according to the allocation.

• Cancellation of nominations: Nominees may be cancelled or changed as many times as they want.

Nomination information on the insurance policy document

Nomination information is included on the insurance policy document. The involvement of the candidate named on the insurance contract fulfils the legal obligations.

If any immediate family member (such as a partner, children, or parents) is named as a nominee under the new legislation, they will automatically become the beneficial owners of the claim benefits and will be referred to as a "Beneficial Nominee." This ensures that, regardless of circumstances, the death benefit would be paid to Beneficial Nominees and not to any other legitimate heirs.

It's worth mentioning that Beneficial Nominees should only be members of your immediate family. As a result, it's always a good idea to name an immediate family member as the candidate to avoid any conflicts between the candidates and legal heirs. 

Benefits of highlighting a nominee for Investment

In the event of the investor's death, a candidate becomes the beneficial beneficiary of the investment. The candidate receives the mutual fund units in a convenient manner. In the absence of a nomination, the legitimate heirs must produce documents such as a will, legal heir certificate, and no opposition certificate from other heirs in order to pass the investment.

To assert units after a unit holder's death, the nominee must complete the KYC process and send documents such as proof of the unit holder's death, the nominee's signature, proof of guardianship if the nominee is a minor, and any other documents that may be needed for transmitting the units in the nominee's name (s).

One of the best life insurance policy companies is Canara HSBC Oriental Bank of Commerce Life Insurance. They offer a diverse range of insurance services that are customised to the individual needs of different customers. Life, wellness, online term plans, retirement options, credit life, and employee benefit divisions are among the company's numerous items available to individuals and groups. While selling goods, the company's primary goal is to meet consumer needs over their life cycle - child education, family protection, long-term savings, and retirement - while maintaining value for money.