Can You Have Multiple Nominees In A Term Insurance Policy?

Who Can Be Included As Multiple Nominees In Term Insurance?

While a person may nominate multiple beneficiaries under a term insurance policy, it is important to understand who can be nominated. The choice of nominees generally depends on the individuals you wish to provide financial support to through the policy proceeds.

Common nominees include:

• Spouse
• Children
• Parents
• Other eligible individuals, as permitted by the insurer and applicable law

For example, a policyholder may nominate a spouse and children if they all rely on the policyholder’s income. Similarly, someone supporting their ageing parents may include them among the nominees.

Ultimately, who can be your nominee(s) depends on your financial responsibilities and the insurer’s nomination guidelines.

How Is The Claim Amount Shared Between Multiple Nominees?

When insurers permit multiple nominees under a term insurance policy, the policyholder is generally required to specify the percentage share of the claim amount for each nominee.

Example

Suppose Anita purchases a term insurance policy with a sum assured of ₹1 crore. She nominates:

If the nomination shares are not clearly specified, the insurer may distribute the claim amount according to the applicable policy terms and nomination rules. Where permitted, equal distribution may apply. Therefore, clearly specifying each nominee's share in a life insurance policy can help reduce ambiguity during claim settlement.

Can A Minor Be One Of The Multiple Nominees?

Yes. A minor can be included among multiple nominees. However, since a minor cannot legally receive or manage the claim amount, an appointee will generally be required to act on the minor's behalf.

The appointee will act on behalf of the minor until they attain the age of majority, as per the insurance company's requirements. The details of the appointee should be communicated at the time of nomination itself. This can help facilitate a smoother claim settlement process.

When Should You Consider Multiple Nominees In Term Insurance?

While not everyone would need multiple nominees, in some cases having multiple nominees in term insurance can be beneficial. You may consider having multiple nominees in situations such as:

• Multiple members of your family depend on your earnings.
• You would like to split the proceeds among your spouse, children, or your parents.
• There is a need for an allocation of policy proceeds in your financial planning.
• You want the policy proceeds to be distributed among more than one beneficiary.

Accordingly, a person supporting multiple dependants may choose to allocate the policy proceeds among them based on their respective financial needs.

What Should You Keep In Mind While Adding Multiple Nominees?

Before completing the nomination in life insurance, it is important to ensure that all details are accurate. Here are a few points that you should keep in mind while filling out multiple nominations:

• Check the name, relationship, date of birth, and address of all nominees.
• Clearly specify the percentage share allocated to each nominee.
• If any nominee is a minor, provide full details of the appointee or guardian.
• Review & update the nomination in case of any significant life events like marriage, childbirth, divorce, or the demise of an existing nominee.
• Verify that the insurer has successfully recorded your nomination details.

If your circumstances change later, you can update the nominee share in term insurance. Most insurers provide a predefined process for updating nomination details, subject to their prevailing procedures and requirements.

Can You Change or Update Multiple Nominees Later?

Most insurers allow policyholders to update or change nominees after purchasing a term insurance policy by following a simple procedure. This may become necessary after major life events such as marriage, childbirth, divorce, the death of a nominee, or changes in financial responsibilities.

Before requesting an update, ensure the revised nominee details, relationship with the policyholder, and share of the claim amount are accurate. Keeping your nomination up to date helps ensure the policy benefits are distributed according to your latest wishes and can make the claim settlement process smoother for your loved ones.

Conclusion

Choosing multiple nominees in term insurance can help you distribute the policy benefits according to your family's financial needs. You can nominate one or more eligible individuals, including family members and, where permitted, by the insurer and applicable law, other eligible individuals. Ensure the nominee details and claim shares accurately reflect your current wishes to help make the claim settlement process smoother.