Who are Beneficiaries in Term Life Insurance Plan and Role?

No one likes to think about their death. But, when it comes to your loved ones' financial security after you are gone, this becomes a critical subject. In this regard, a term life insurance policy is a reliable asset, promising to take care of your loved ones in your absence. However, as critical as it is to buy a good term insurance plan, the same importance also matters when choosing a beneficiary for your insurance policy.

You will need to name at least one primary beneficiary for your term life insurance policy. In some cases, you can also specify a secondary beneficiary or even multiple beneficiaries, depending on the policy you choose.

Here is everything you need to know about who the beneficiaries in your term life plans can be and their role:

Who is a beneficiary?

In an insurance contract, there are three parties involved. The policyholder – the person who owns the policy, the insurer – the company that provides insurance coverage, and the beneficiary – the one who receives the benefit in case of the policyholder’s death.

Who can be a beneficiary for your term plan?

There is no hard-and-fast rule on who you can choose as your term life insurance beneficiary. You can choose your spouse, kids, parents, other family members, friends, or even someone outside this circle. However, it is advisable to select a beneficiary from your immediate family.

But the most important question you must ask yourself when choosing a beneficiary is – Who needs the money the most after you are gone? If you are married, your spouse or children might be the first preference. In case you are single, you would want to give it to your parents. That said, the ultimate choice solely depends on you.

What is the role of a beneficiary?

The person you appoint to be your term life plan’s beneficiary must notify the insurance company about your death or any unfortunate event. The beneficiary will need to initiate the claim process, fulfil all documentation requirements, provide the necessary proofs and important information to the insurance company.

Upon admission and approval of the claim, the insurer will grant the term insurance plan benefit to the beneficiary according to the frequency, specified by you in the insurance policy.

What will happen if you do not have a beneficiary?

In case you fail to name a person as the beneficiary in a term insurance plan or worst-case scenario – if the beneficiary dies during the term of the policy and you fail to update it, the insurance company will follow specific measures in these conditions. The actions are specifically mentioned in the insurance contract. Hence, it is good to always read the terms and conditions of your term plan before buying.

In general, when there is no beneficiary, the insurance company offers the sum assured to the heir of your will. The heir will need to provide waiver of legal proof or an indemnity to the insurance company. However, if there is no legal will, the benefit is usually passed to the immediate heir, including your spouse, children or parents.

How to appoint a term insurance plan beneficiary?

At the time of purchase, all insurance companies ask you to fill out a form, which requires you to name a beneficiary of the insurance plan. Once you fill out the details, the insurer considers the beneficiary as the legal beneficiary in your absence. You can add, update, or remove the beneficiary at any time during the term plan.

Appointing a beneficiary to your term life insurance plan is highly critical to ensure your that the purpose of buying the insurance, in the first place, is easily fulfilled. You can choose secure and affordable term plans from PNB MetLife and financially protect your loved ones against any uncertainty.

To know more about Term Plan, Term Insurance & long term savings visit PNB MetLife website.