What is Nominee in Health Insurance, Meaning & How to Select Nominee?

Source: dnaindia.com

By now, you should know the importance of having a health insurance plan to protect you financially in case of a health-related crisis. But to ensure that your family members or dependents don’t miss out on all the benefits of your health insurance policy, it is important that you select a nominee for a health insurance policy.

By nominating a trusted individual, you guarantee that the financial support from your health insurance reaches your loved ones seamlessly during challenging times.

Remember, planning ahead isn’t just about protecting yourself; it’s about ensuring peace of mind for those you care for the most.

A nominee is a person (or people) who are chosen by the policyholder. In normal situations, when you make a health claim for hospitalization or medical treatment, you get that amount back yourself.

But, in the unfortunate event of your death during hospitalization or as a result of an accident, the health insurance company will pay the claim amount to this nominee.

While this is mandatory in life insurance, it is also possible to appoint a nominee for a health insurance plan or even a personal accident insurance plan.

Mr. Ajay, his wife Shweta, and their two children reside in Delhi. To safeguard his family's future, Ajay purchased a health insurance policy with a sum assured of ₹10 lakh. He made Shweta his nominee while purchasing the insurance.

Unfortunately, Mr. Ajay met with an accident and passed before the claim process was completed. Since Shweta was the nominee, the insurance company processed the claim amount and released it directly to her.

Hence, Ajay’s family will be financially secure in the event of his death, as he nominated Shweta.

NOTE: This is not applicable in the case of a cashless health insurance claim, where the amount is settled directly with the network hospital.

The nominee plays a big role for the policyholder. It helps to settle the claim in a sudden crisis, which leads to the demise of a policyholder. Here are some of the roles of nominees in health insurance.

• The nominee is the person who will receive the insurance benefits in case of the policyholder’s demise.
• Having a nominee ensures the claim process is quick and hassle-free for your family.
• It guarantees that the health insurance benefits are utilized to cover medical expenses or other financial needs of dependents.
• Appointing a nominee reduces disputes over the insurance payout among family members.
• The nominee ensures that the sum insured is used effectively for the intended purpose.

It is important that you inform your health insurer about who you have nominated for your policy. If something goes wrong with your health, you can ensure that your loved ones are protected financially:

• Financial Support for Your Family – In the event of a death, the entire family of the deceased suffers, and in the case of large hospital fees, they may have an added financial burden. But by selecting someone as a nominee, you ensure that there are no financial difficulties.
• Safeguard Your Dependents – It is important that you financially safeguard those who are dependent on you. And you can ensure this by nominating them in your health insurance policy, so they will have help to overcome financial hurdles in the future.
• Equally Shared Benefits – In case you have selected multiple nominees, the claim benefit can be equally shared among them.
• Avoid Legal Complications – If you die without identifying a nominee for your health insurance, the insurer will have to identify your legal heir to receive the claim amount. Since this may include multiple individuals, it can involve court arbitration and other complications for your family.

Essentially, appointing a nominee for your health insurance policy will ensure that there are fewer hassles in case the worst happens. Thus, it can make a very hard situation a little bit easier for your loved ones.

There are no real restrictions on whom you can select as a nominee for your health insurance plan. It is possible to nominate immediate family members such as:

• Parents
• Spouse
• Children
• Or distant relatives
• Or even your friends

It is also possible to nominate a minor (someone who is below 18 years of age). In this case, you will also need to mention a guardian or appointee, as the minor cannot legally handle the claim amount until they are an adult.

Additionally, remember that if a nominee dies before the policyholder, the claim amount will go to your legal heirs. This is decided either as per your will, or is decided by the courts.

In general, it is advisable to name immediate adult families as your nominees, especially as the claim amount can provide essential financial support at a difficult time.

The first thing to remember while opting for a nominee is that they should be of legal age and of sound mind. Other than these two factors, the nominee has to fulfil the following criteria:

Has to be a Legal Heir: Enlists spouse or children. 

Has to be an Immediate Family Member: Enlists parents, siblings, and or other family members.

Has to be an Extended Family Member: Enlists relatives, cousins, friends or relatives.

You can add in the nominee details when you purchase your health insurance policy, whether you buy it online or offline. However, it is possible to appoint a new nominee at any time by informing your insurer.

It is also possible to change or remove individuals as nominees at the time of renewal or during the policy period. Once again, you can do this by contacting your insurer or Third Party Administrator (TPA).

When the worst happens, and you (the policyholder) die during hospitalization, it is up to the nominee to claim reimbursement. They can do this as follows in the case of a reimbursement claim:

Step 1: The nominee needs to inform the insurer or TPA of the death, providing a valid succession certificate and the death certificate and in the case of accidental death, a copy of the FIR and postmortem report as required. 

Step 2: The nominee must then send any required documents to the insurer within 30 days. These might include medical bills, health records, and doctor’s reports, as well as the deceased’s death certificate, the nominee’s identity card, relationship proof, and bank details.

Step 3: The insurer will inform the policyholder of any additional requirements and do the verification.

Step 4: Once the insurer verifies the documents, it will transfer the claim amount to the nominee's account.

Selecting the appropriate health insurance nominee requires serious thought. This makes it more likely that the benefits will end up in the hands of the proper person and be used for the insured's intended purpose. When selecting a candidate for life insurance, keep the following things in mind:

Age of the Nominee

It is crucial to consider the nominee's age. This is because it affects their capacity to administer and use the insurance benefits efficiently. If you designate a minor as a nominee, you might also need to provide a guardian.

Connection to the Nominee

A spouse, kid, or parent who has a close personal bond with you is the best nominee. This guarantees that the beneficiaries will be someone you can rely on to manage the money sensibly and in your dependents' best interests.

Dependency on Money

Make sure the candidate you choose is either financially reliant on you or has a thorough understanding of your financial dependents' needs. This guarantees that the insurance payout will support people who depend on your income. 

The Nominee's Health

This is also a crucial criterion, mainly if the nominee is supposed to oversee the money for an extended time. To manage the duties of handling the insurance proceeds, pick a nominee most likely to be in good health.