Nominees and Their Right To Assets
Nominees are a significant part of a life insurance policy. An aspirant insured, when he/she takes a life insurance policy, is required to nominate nominees. The nominees, in return, are required to ensure that the property of the insured goes to the legal beneficiaries upon the insured's death.
Benefits of appointing a nominee
Appointing a nominee simply ensures that an insured's entire portfolio of investments and earnings accruing from the investments remain in the safe custody of a trusted individual when the insured is no more. A nominee also helps the legal heirs of an insured to do away with the hassles of undergoing the time-consuming formalities produce documents proving their relation with the deceased, the death certificate, among others.
Who is a nominee?
A nominee is a person who is legally entitled to receive the proceeds of the insurance of an insured, if the insured person dies during the term of the policy. A nominee, however, has no rights to the proceeds of the policy, except as a trustee holding the proceeds on behalf of the legal heirs of the insured.
What rights does a nominee have to insured's assets?
It is only after the death of the insured that a nominee is entitled to avail of the benefits from the insurance policy. However, outliving the term of the policy by an insured leads to the cancellation of the nomination.
Nominee as a legal heir
The proceeds of a deceased insured's trust goes to a nominee in their role as trustees for the legal heirs of the insured. However, the proceeds don't belong to the nominee unless the nominee is also a legal heir.
Therefore, a nominee’s role as a caretaker is vital, not only for the heir(s) who will become legal possessors of a person’s assets, but also for the deceased because he can rest assured that his wealth will be passed to its rightful owners upon his death.