Nominee in Health Insurance

Due to the evolutionary lifestyle, the risk of diseases is increasing day-by-day. Having a health insurance policy protects you and your loved ones financially at the time of a health-related crisis. Sometimes health-related mishaps lead to the death of a person, in such a situation his/her nominated loved ones (nominees) can be financially secured.  Read ahead to know more about the role of a nominee in health insurance.

A nominee is a person or a group of members, nominated by the policyholder for health insurance benefits. If the policyholder loses his/her life during medical treatment, the assured sum will be entitled to the nominee. Similar to Life and Personal Accident Insurance, a Health Insurance plan also offers the option to submit the nominee’s name.

The nominee’s name should be mentioned in the insurance policy agreement. Even though it is not mandatory to specify nominees, to financially support your family in a crisis time you need to mention one person’s name in the insurance proposal. You can opt to nominate any of your friends or immediate family members such as spouse or children. However, it is wiser for you to nominate your immediate family member(s) as your family needs emotional and financial support during an accidental hospitalization.

While adding nominee names to a health insurance policy, you need to submit a few details about the enlisted person such as their full name, age, date of birth, address, and the relationship he/she shares with you. Putting incorrect information may lead to complications at the time of the insurance claim.

A policyholder can change the nominee and appoint a new one by informing his/her insurer. If the nominated person dies before the policyholder, the insured amount will go to the legal heirs.

It is extremely important to nominate someone for your health insurance policy as it can save your loved one’s finances in times of need. In case, you get hospitalized for an extended period and an unfortunate mishap occurs in the hospital, the insurance benefits will be paid to the nominated person. If the insured dies without making a nomination, the insurer has to identify the legal heir to receive the compensation. Such a situation may include multiple claimants and can cause complications among family members. Thus, the nomination discards such hassles.

The process is simpler if you and your loved ones are insured with a group health insurance policy. In such a case, after the death of a member, the insurer will transfer the amount to another member. The legal heir can claim from that member. 

Being a nominee for someone's health insurance policy can be confusing. You may struggle with paperwork, navigating claims procedures, and figuring out taxes. Here are some tips:

Staying organised and seeking assistance early on can help overcome many hurdles.

Life situations change. As the policyholder, update nominees if you get married, have children, or if an existing nominee passes away. Outdated information can delay settlements and may require going through lengthy legal processes before the right heirs get proceeds.  

Review nominee details at least every 3-5 years. Log in to the insurance portal or contact the insurer for the change request form. It takes little time but saves nominees from future struggles.

If the nominee is a minor, the claim amount is given to their appointed guardian, who manages it on the child's behalf. As a policyholder and parent, you can choose the guardian - another family member, relative or friend willing to take up responsibility.  

The guardian must submit all documents verifying the relationship with the minor and get the insurer's approval. They manage withdrawals only for necessary child expenses and transfer funds once the nominee becomes an adult. Choose a guardian wisely for your child's security.

Here are tips when naming a nominee who can adequately utilise policy benefits if you are no longer there:  

Below are some criteria for having a single nominee vs multiple nominees

The nominee can be considered a minor if his/her age is below 18. The policyholder can nominate a minor person for the benefits, however, the minor will not be eligible to receive the assured sum till he/she reaches the age of 18. Meanwhile, the amount will be paid to the appointee as declared by the insured person.

Choosing the right nominee is very crucial for a health insurance policy as the insured amount will be paid to the nominee after the unfortunate demise of the policyholder during the medical treatment. The policyholder can nominate his/her parents, spouse or children. However, in some cases, he might choose distant relatives such as an aunt, uncle, nephew or niece. In this situation, a policyholder must submit the necessary documents to declare distant relatives as nominees. The agreement will represent that the nomination has been done on his own free will. Failing to do so may result in the cancellation of the claim request.

Nominees play an important role in every insurance sector, especially in health insurance. So it is wiser for you to mention nominees to guard them financially in your absence.

Also read: ABHA Card Benefits