You would have often seen an advertisement on television where the wife laments the things they cannot do due to lack of funds as the husband forgot to buy an insurance plan. However, there may be instances when the insured may have bought an insurance plan keeping in mind the financial requirements of the family but the nominee may still not get the money. This could be very distressing for the family as not only will they have to deal with the emotional pain of losing a loved one but they may face financial distress too!
Reasons for the nominee not getting the insurance money:
Below we look at the various reasons due to which the nominee may not get money and how to avoid such a situation. When buying a policy, do make sure that you read the fine print and also obtain full clarity about all aspects of the policy especially the nomination part.
- Nominee not being informed: This is the most common mistake that results in nominee not getting the insurance money. If the nominee is not aware about the existence of the policy or details like company name from where the policy has been bought or the whereabouts of the policy document then the nominee cannot make a claim in the event of the insured dying.
Tip: Whenever you buy a policy, do inform the nominee about details like the company name, where the documents are kept, and insurance amount and so on. In case you make any changes or buy additional cover then also keep the nominee updated.
- Nominee details not updated:
There might be an unfortunate scenario where the nominee may pass away, in such a case it is required that a new nominee is appointed and the details updated with the insurance provider. The policyholder can change the nominee as per his/her desire as many times he/she wants. With changes in family dynamics, the policyholder may want to change the nominee in certain conditions. Do ensure that nominee’s contact details also remain updated at all times.
Tip: Check your policy details from time to time in order to ensure that all details are updated and as per your desire and requirement.
- Inaccurate information or wrong disclosure of facts:
Providing inaccurate or incomplete information whether erroneously or intentionally can also lead to the nominee not being able to get the funds after the death of the insured. Premiums are based on various factors like age, medical history, health conditions, professional details etc and if the insurance company discovers that any misrepresentation was made they have the right to reject the insurance claim made by the nominee.
Tip: Be a responsible insurance buyer and disclose complete and accurate information when filling out the policy form. Also, when you receive the policy document, go through it to check if all the details and information mentioned is correct. If there is some discrepancy get it rectified immediately else the nominee/s might have to face problems when they have to file a claim.
- Unawareness about nominee rights:
Not being aware about the rights and legal provisions could also pose a hindrance in nominee receiving the funds after the demise of the policyholder. Contrary to the popular belief a nominee does not have absolute rights. If the nominee in the policy and the person to whom the amount is bequeathed in the Will are different then priority is given to what is mentioned in the Will rather then what the policy document says.
Tip: If you want the nominee to have access to insurance money then there should not be any contradictions about the same in the will. The Will should clearly state who gets what including the nominee mentioned in the policy document.
Any insurance policy is bought with the intention of safeguarding the financial well being of the dependents and the nominee not being able to get the insurance money would defeat the purpose. Thus it is important that the policyholder is very careful about the process of appointing the nominee. In case you want to nominate more than one person in the insurance policy, be clear about the share of each to avoid any confusion later on.