Nominees, such as parents, spouses, and children, are now considered beneficial nominees, wherein previously, they were categorised as receivers. The Insurance Act has added the category of 'beneficial nominee,' which only includes the policyholder's immediate relatives. As mentioned above, a beneficial nominee can be the insured's spouse, children, or parents. Previously, in India, life insurance companies could provide the claim proceeds to the nominee, after which the other rightful legal heir could claim the benefits from the nominee. Thus, it is prudent to understand the significance of life insurance 'beneficial nominees' and appoint one to avoid this conflict.

Source: Mint July 06, 2021 04:52 UTC