Successive Nomination

Successive Nomination - Alternate Nomination

 It is often well known how necessary nominations are in investment and insurance. Does nominating always guarantee a smooth future disbursal? The answer may be is a no. Even if the documentation is done, sometimes it is very difficult to get the disbursal after an unfortunate event. It is very common that the husband nominates wife, and in turn wife nominates the husband. In current covid period, if both passed away in quick succession, getting the disbursal by their kins is a mammoth task. There is a way to avoid these complications. Let us understand that better.

 When an investor or insurer dies after making an investment or after purchasing an insurance, the disbursal money available must go to their nominee. This is something basic about nomination and very common knowledge. There are three types of nominations.

 

1.   Individual (Single) Nomination

 

The first type is individual (single) nomination in which if one dies, the entire money is given to the single/sole nominee.

 

2. More than one or joint nomination (Multiple Nominations)

 

The second type, which is joint or multiple nomination, can be registered with more than one nominee. The maximum allowed nominees are three different people. For example, let us assume the three nominees are A, B and C. 30% for A, another 30% for B and 40% for C. This nomination has been registered by the investor/insurer. In the case of disbursal, total outstanding is disbursed to all the three nominees in the given proportion.

 

3. Successive Nomination   

 

This third type is a new variation. This is called successive nomination or alternate nomination. In this case, if an insurer dies, disbursal first goes to A. All 100% to A. If A dies for some reason, then the 100% money must now go to B. If neither A nor B are alive, then C will get the 100% of money. Such nominations are called successive nomination.

 

The main difference between the second type and the third type is that, in the second case, three nominations mean that the entire amount of money goes to all the three in their assigned proportions, but in the case of third type, successive nomination, the total amount of money goes to one of the three, the entire 100%. That person is determined by the order and if they are alive or not.

 

Successive nomination during these covid/pandemic periods are very advisable. It helps in a smooth disbursal of amount to nominee when invested or insured person is not alive. In the case of LIC, to avail successive nomination, insurer can fill and apply by using Form 5194 rev. This can be done at the proposal stage or also at the running stage of the policy.

 

In the case of young insurers, their father or mother is the one who is usually nominated. The chances of both the insured dying before the insurer is high. In such instances, this successive nomination is very useful.

 

Nomination in Bank and Mutual Fund Investments

 At present, there is no third kind of successive nomination in mutual fund investments or bank deposits.

 It is advisable to go for multiple nominations when investing in mutual fund investments or banks.

 It is better to nominate even if it is an E or S account.

 It is also advisable to change the nomination manually when the nominated person passes away.