All You Need to Know About Nominees of a Health Insurance Policy

Why should I buy insurance of any type? This is one of the most basic questions that one needs to answer or get the proper answers before they buy a policy. Since insurance categories are abundant, it is quite difficult to point out the reasons for buying each type of insurance. However, there are some very basic and common reasons for doing so.

Any insurance policy provides you with financial assistance should things not go in your favour. If you consider life insurance, meeting with an accident or even death of a policyholder qualifies as the unfavourable circumstance. Whereas under a health insurance , health of a person, getting diagnosed with an illness or getting hospitalized for pregnancy etc. would be eligible for the same.

Such unprepared circumstances can easily throw you and your finances off track. Thus, insurance of the right type helps you tackle such situations and come out on the top of it. When you buy insurance, you need to be aware of a few other basic things, such as the policy coverage, some exclusions, the premium that you are paying and nominees.

Who is a Nominee?

A nominee or nominees are individuals whom a policyholder mentions in their policy documents. In the unfortunate event of the death of the policyholder, these individuals would receive the benefits of the policy. In the case of death cases, the insurance company would pay all the benefits to the nominees.

And when it comes to naming someone as the nominee for a policy, there aren’t any restrictions. You can name anyone as a nominee in your policy along with their relationship with you. However, it is recommended that you name immediate family members as nominees such as spouse, parents or children.

To get rid of confusion regarding the status of a nominee as legal heir, Beneficial Nominee concept came into effect in 2015. According to the law, if any immediate family members like the ones mentioned above are nominated as the nominee, they qualify as a beneficial nominee. In other words, they would receive the benefits of the policy and not the legal heirs. To ensure that there aren’t any conflicts in the future, it is recommended to name immediate family members as nominees in a policy document. 

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Who is a Minor?

Naming your children in the policy document who are below the age limit of 18 years is quite understandable. After all, you would want to secure their future. However, as per the law, they are eligible to handle the money until they turn 18. Thus, you would have to appoint a guardian or custodian to take care of the money. This is only till they turn 18. Once the minor turns into an adult, they can use the claim amounts. And if the nominee of a policy is a minor, the insured must also name an appointee for the same.

Things to know about nominees:

1. While theoretically there isn’t a reason why you cannot nominate a non-family member for your policy, it isn’t the norm. And even if you nominate, be ready for additional questions or even nominee rejection by the insurer. Thus, you must choose the right nominee for a policy. 

2. You can change or appoint new nominees for your policy as well. There usually aren’t any limits when it comes to changing the nominees of your policy. But the last made changes take the highest priority. If you have an insurance policy, it is essential to keep the nominee list updated. 

Nominee for Health Insurance

A health insurance plan is slightly different in terms of nomination when compared to a life insurance plan. In a lot of the standard cases, an insured claims amount for hospitalisation and the nominee does not come int the picture. However, there are a few cases when they are needed.

For instance, in the case of an accident, the sum assured would either go to the legal heir of the insured or the nominee mentioned in the policy documents. 

Should a policyholder lose his or her life during any treatment, the nomination would also be crucial. For cashless service, there aren’t any complications. However, if the policyholder had opted for reimbursements, the same would go to the nominee of the policy. Should the legal heir and nominee be two different individuals, it is the nominee’s responsibility to pass on the necessary funds to the legal heir.

Not only under health insurance but under every insurance policy, nominating family members under the policy is essential, be it life insurance, motor insurance, or any such insurance.

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 How to Choose Right Nominee for your Health Insurance Plan

While talking about who should become the nominee for your health insurance plan, there are no boundations or rules. Anyone can be nominated by the policy buyer, be it your relative, friend, member of your family such as children, spouse etc. However, it is recommended to choose a nominee from your immediate family members at the time of considering expenses incurred due to accidental hospitalization------ the crucial time, where your family requires support both financially as well as emotionally. In case of a cashless Mediclaim, considering all the terms and conditions mentioned in the policy document, the bill is directly settled with the hospital. However, in case of claim reimbursement, the amount is given to the nominee. You should consider the below points while choosing a nominee:

• Complete Details regarding the Nominee: The policyholder needs to give correct details of the nominee including name, date of birth, age, relationship with the policyholder, address etc. Any information if found to be incorrect can pose as a problem at the time of registering for the insurance claim.
• Changing nominee details: Being a policyholder, if it is needed you can even appoint a new nominee by telling your insurance company regarding the same. In the scenario where the nominee dies prior to the policy proposer, then all the benefits will go to the legal heir.

At the time of purchasing a health insurance plan, the policyholder gets an option to make a minor( less than 18 years) nominee. In case, the policyholder nominates a minor, then they are required to mention the information of appointee or guardian. However, the claim account cannot be handled by the nominated child till the time they become an adult. Therefore, at the time of selecting a nominee for your health insurance plan, a policyholder should refrain from nominating a minor. Moreover, selecting the right nominee is important when choosing a person accident insurance plan.

Also Read

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Family Mediclaim Policy - To Cover Your Family Health Care Expenses