Term Insurance 365 views March 6, 2021

The unfortunate death of an individual can create financial problems for his or her loved ones. But by choosing a life insurance product, your family or loved ones get financial protection in the unfortunate event of your death. Term insurance is one of the popular life insurance products among customers that provide a lump sum amount in case of a policyholder’s death during the policy term. A policyholder nominates a person i.e. a nominee while choosing the life insurance policy. But who can claim the term insurance sum if both the policyholder and nominee die?

Term Insurance

To know the right life insurance cover, please fill the details below and our policy experts will get in touch with you

+91

It is one of the most important questions that people often ask out of curiosity. In case both the policyholder and nominee die during the policy term, the appointment of the person for receiving the sum assured depends on several factors. Some of these are – whether a policyholder has registered his or her legal heirs in the policy, the will (if any), whether he or she has taken a loan against the policy, etc.

In this article, we will discuss the individuals who can claim the sum assured if both the policyholder and nominee die during the policy term, across situations. So, keep reading!

Individuals who Can Claim the Term Insurance Sum Assured in the Event of Policyholder’s Death During the Policy Term

In case the policyholder dies during the policy term, provided the policy is in force and all the due premiums have been paid, the company will pay the sum assured to the nominee. So, a nominee is the first person who has the right to receive the funds. However, a policyholder can change the nominee anytime during the policy term. If by chance a nominee dies during the policy term, the sum assured will be given to legal heirs or legal representatives, or succession certificate holders.

Let’s learn about the individuals who can claim the term insurance sum in case a policyholder dies during the policy term. Have a look below to know the same!

Beneficiary

If a policyholder dies during the policy term, a beneficiary is considered a true heir to the sum assured amount. Any individual insured with the policyholder (in case of money back or endowment plans), proposer, nominee, assignee, or someone who has been an executor or administrator before, can become the beneficiary.

If the policyholder has mentioned two different persons as a beneficiary in the will and nominee in the insurance plan, the priority will be given to the ‘will’, and the sum assured will be given to the beneficiary in the event of the policyholder’s death.

Assignee in case of Loan Against Policy

Some life insurance plans also provide loan facilities against the policies up to a certain percentage of surrender value. If a policyholder has taken a loan against his or her policy and dies before paying the same, the assignee will need to pay the loan first.

In such a case, the policy will get transferred to the assignee, who will get the sum assured. Neither family nor the legal heir will get any death benefit. Here, you should understand that assignment does not cancel the nomination but only affects the nominee’s rights according to that situation. After the loan repayment, the policy will be reassigned to the policyholder, and nomination will be automatically revived.

Appointee if the Nominee is below 18 Years of Age

If the nominee is below 18 years of age and is not an adult at the time of the payment of the insurance claim, the sum assured will be given to the appointee. Do remember that the appointee will receive this amount on behalf of the minor.

Executor and Administrator

A will of a policyholder contains details about the distribution of assets after his or her demise. An executor ensures that the distribution happens according to terms mentioned in the will. In most cases, a lawyer, an accountant, or a trusted family member is appointed as an executor, and it is mentioned in the will.

If the will does not have any mention of the executor, the court appoints an administrator who will perform the duties of the executor. Thereafter, they will decide who will get the term insurance sum if both the policyholder and nominee die during the policy term.

People Also Read