Selecting the Right Nominee for your Health Insurance
With increasing lifestyle diseases and harsh climatic conditions becoming a cause of worry, the chances of medical emergencies have only gone higher. Getting a family health insurance policy prepares you financially by protecting your hard-earned savings from an unexpected blow. Also, it rids your family or dependents from an additional financial burden.
In order to ensure your family members do not miss out on any benefit of your mediclaim policy, you must take the utmost care when furnishing details to your insurer. This also includes filling in the right nomination details.
The process could be a little confusing if you are a first-timer. Even otherwise, a guide to selecting a nominee for your mediclaim policy will clear all your doubts regarding the nomination of the right person as the beneficiary of your insured amount.
Definition of Nominee
A nominee is an individual who is chosen by an insurance policyholder for receiving the benefits of the policy upon his or her death. Often, this is relevant in case of life insurance or personal accident insurance. But, even in health insurance plans, there is a provision to specify the nominee details. In an event when the insured person loses his or her life during medical treatment; the insured amount shall be paid to the nominee.
Even though this is not mandatory, you must specify a nominee in the health insurance proposal form so that your family gets the financial support.
How to Select the Right Nominee for your Insurance Plan?
When the question is about who should be the nominee for your family health insurance policy, you are not bound by any rules and can choose to nominate anyone - a friend, relative or an immediate family member like spouse and children.
However, mentioning your immediate family member(s) as a nominee(s) is a wise decision to make when you consider expenses incurred during your hospitalization - a time when your family is in need of financial and emotional support.
If it is a cashless mediclaim, the medical bills are settled directly with the hospital. But, in case of reimbursements, the amount will be paid to the nominee.
Here are some points which you must consider when selecting a nominee:
- Provide complete details: You are required to provide correct details of the nominee including their full name, address, age, date of birth and the relationship you share with them. Any incorrect information can create a problem when raising an insurance claim.
- Option to change nominee details if require: As a policyholder, you can appoint a new nominee if required by suitably informing your insurer. If the nominee dies before the policyholder, the benefits will go to the legal heirs of the policyholder.
When buying a term insurance plan, there is an option to nominate a 'minor' - a person less than 18 years of age. For instance, if you are nominating your minor child, you should specify the details of the guardian alongside. However, your child legally cannot handle the claim amount until he or she becomes an adult. Thus, for mediclaim or health insurance plans, you should avoid nominating your minor child.
The Insurance Regulatory and Development Authority of India (IRDAI), in an amendment to the Insurance Act 2015, mentioned a category called 'beneficial nominee'. This amendment clarifies the rights of a legal heir as a nominee of an insurance policy. That means, if a policyholder nominates any immediate family member in the health insurance plan, that member is regarded as a beneficial nominee and would receive the benefits of the policy.
Thus, if the nominee is not a legal heir, he or she is required to transfer the benefits to the legal heir when the insurance claim is made.