What is Nominee in Health Insurance, Meaning & How to Select Nominee?
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.
What is a Nominee in Health Insurance?
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.
Example to Understand Nominee in Health Insurance
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.
Role of a Nominee in Health Insurance
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.
Types of Nominees in Health Insurance Policies
You must know the varieties of insurance nominees in order to understand their meaning completely. There are various kinds of nominees for life insurance. These are categorized according to their classification and the way life insurance benefits are disbursed:
Disclaimer: This table is for representation purposes only. Different companies offer different options regarding the types of nominees. At Digit, we only offer beneficiary nominees and minor nominees under our Health Insurance Policy.
Why is Updating the Nominee Details Important in Medical Insurance?
Situations in life change. If you become married, have children, or if an existing nominee dies, you, the policyholder, must update the nominations. Outdated information might cause settlements to be delayed and may necessitate a protracted legal process before the policyholder receives the cash
Some Common Importance of Nominees in Health Insurance Include:
Selecting a nominee guarantees that your claims will be handled instantly and that the recipients will get the benefits without any difficulties. This lessens the chances of legal issues and fastens the claim process.
Policyholders can designate the beneficiaries by selecting a nominee. This avoids all possible disputes between the heirs and guarantees that the policyholder's choice regarding asset distribution will be accepted.
Selecting backup nominees establishes a backup plan in the event that the principal nominee is unable to carry out their duties. This guarantees that the policyholder's money and assets are always managed and that there are fewer delays and hassles.
Benefits of Nominees in Health Insurance
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.
Whom to Select as Nominees for Your Health Insurance Plan?
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.
Who is Eligible to be Your Nominee in General Insurance?
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.
How to Add or Change a Nominee in Health Insurance?
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).
What is the Process for Nominee Claims?
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.
Factors to Consider When Choosing a Health Insurance Nominee
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.
FAQs about Nominee in Health Insurance
What happens if there is no nominee under your health insurance?
If you have not named a nominee in your health insurance plan, then in the case of a reimbursement claim, the insurance company will need to identify the legal heir to receive the compensation. In case this heir is not mentioned in a will or other document, they will require a succession certificate from a court of law to release the claim amount.
What is the difference between a legal heir and a nominee?
A person’s legal heir is the person who is entitled to succeed or inherit their properties. This could be the closest living relative or any individual mentioned in their will. However, a nominee is someone who is named by a policyholder to receive their claim amount after their demise.
Is it mandatory to have a nominee for a health insurance policy?
No, it is not mandatory. However, it is recommended that you do so to avoid complications in reimbursement after the policyholder's death.
Is it possible to have more than one nominee for your health insurance?
Yes, it is possible to name multiple people as their health insurance nominees, including family members or friends.
Can you appoint a minor as your nominee?
Yes, you can name a minor as your nominee. However, in such cases, you will also need to name a guardian or appointee along with this person. This is because the minor individual can’t legally handle the claim amount until adulthood. Thus, either the amount will be paid to the guardian/ appointee to use in the child's name, or they will get the amount once they turn 18.
Can you name a non-family member as a nominee?
Yes, you can name a non-family member, such as a close friend, as your health insurance nominee. However, not all policies allow you to add a non-family member as a nominee. You must read your policy document before proceeding.
What about the nominee if you have a family health insurance policy?
In case you and your immediate family share a family health insurance policy, and you haven’t named a nominee, after the death of any member, the insurer will transfer the claim amount to another member, and the legal heir can apply to them for the amount.
Who can decide on a nominee?
The policyholder should mention the names and specifics of the nominees himself. Giving false information about the nominees could cause issues when it comes time to make a claim.
Is it compulsory to set a nominee for a health insurance policy?
No, it is not compulsory to decide on a nominee for health insurance. However, it will be beneficial to designate a close relative or member of the policyholder's immediate family to prevent issues while paying out the insured amount after the policyholder passes away.
Is it possible to withdraw my nomination during a policy time?
Yes, you can withdraw your nomination during a policy time by discussing it with your insurer.
Is a nominee eligible to become an owner?
No, a nominee does not actually own the insurance policy. They only serve as guardians of the money, which is ultimately given to the beneficiaries or legal heirs.
What is the rule for nominees?
Nominees must be formally designated by the policyholder in the insurance policy documentation. Throughout their life, the policyholder can often amend or modify this nomination as needed.
What occurs if an insurance nominee passes away?
If the nominee passes away before the policyholder, the policyholder must choose a replacement nominee as quickly as feasible. This can be accomplished by contacting and speaking with the relevant insurance provider both in person and online.
What is the maximum number of nominees permitted to hold life insurance?
It is possible to designate more than one candidate for a life insurance policy, and each nominee will get a distinct share of the claim amount. When the head of the family appoints several nominees in his policy, this is typically observed among family members.
Can a proposer be a nominee in Health Insurance?
Yes, the proposer can also be a health insurance policy nominee. For example, if you purchase a health insurance policy for a family member, you can be both the proposer (the person who buys the policy and pays the premiums) and the nominee (the person who will receive the benefits in case of the insured's death).
What details are required for making someone as a nominee?
It is necessary to provide correct information to the nominee to make sure there are no problems when raising a claim. This includes:
- Personal Details: Full name, date of birth, age, address
- ID Proof: A valid identity proof, such as a driver’s license copy
- Proof of Relationship: Details of the relationship the nominee shares with you, especially in case of a distant relative