Nomination is essentially naming someone to receive the insurance payout in case of your death. It sounds simple, but it plays a crucial role in ensuring a smooth claims process. Without a nominee, your loved ones might have to run from pillar to post for legal paperwork.
Who Can Be A Nominee
Technically, anyone you trust can be a nominee, but most people usually name close family members.
“Insurance firms usually prefer that you name a member of your immediate family, particularly for life insurance. If you nominate someone outside your family (like a friend or business partner), you might need to explain why and give some documentation,” says Kunal Varma, CEO and co-founder, Freo.
The key thing is that the nominee should ideally be someone who will directly face the financial impact if you're not around.
“From what I’ve seen, many people buy insurance when they’re single and list their parents or siblings as nominees. But after they get married or have children, they often forget to update that information,” says Amit Suri, CFP and founder of Aum Wealth.
That small oversight can lead to big problems later. So whenever there’s a major life change like marriage or becoming a parent, it’s important to revisit your nomination. It helps ensure the money goes to the right person without delays or legal complications for your family
“One of the most overlooked aspects of insurance planning is keeping your nomination updated. We’ve come across multiple cases where families have had to wait months—or even go through legal battles—just because the nomination was either missing or outdated,” adds Suri.
Why Nomination Is Important
Here are some important things to keep in mind.
“If there’s no nominee mentioned, the claim doesn't automatically go to the spouse or children. It becomes part of the legal estate, and the family has to obtain a succession certificate from the court. This delays the process and adds stress during an already difficult time,” says Suri.
If the nominee has passed away before the policyholder, and no new nominee is added, the same legal route applies. The nomination becomes void, and the insurer cannot release the funds without a clear legal directive.
“It’s a five-minute update—but it can save your family months of paperwork and emotional strain. Every policyholder should review their nominations regularly, especially after major life events like marriage, childbirth, or the death of an earlier nominee,” says Suri.
“It is crucial to ensure that when purchasing a policy, the nominee is appointed, and furthermore, that the nominee's details are refreshed in the event of changes within the family dynamics,” says Verma.
