The Buyt Desk
Rajshri’s world shattered when her husband Rajiv met with a road accident. Rajiv succumbed to his injury. After a few days, when the relatives saw the documents related to Rajiv’s bank account and investment, they were stunned. Rajiv probably started investing early and had made his friend Sanjay the nominee in all his financial documents.
A large number of people make this mistake. They make anyone a nominee in their property and investments etc. before marriage, but do not update it after marriage. Later, if some untoward incident happens, then the family has to bear the brunt of it.
If the wife does not have any investment or property for survival, then this crisis becomes even more serious. To avoid this, it is necessary that you always keep your investment-related formalities updated. Do not forget to make the necessary changes as and when is required. In the case of investment, a small mistake can spoil the hard work of a lifetime. Make sure that you always have a nominee in your property and investment-related documents. Keep updating it from time to time.
Just imagine, you invest in a PPF account all your life so that you can enjoy a relaxing retirement with your family. Then, tragedy strikes and you are no more around your family. Do you think your spouse and kids will get the corpus you saved for them all your life without having their name in the nominee column? Logically, your investment benefits should pass on to your spouse and kids, but in real life, it won’t, if you have not mentioned their name in the nominee column of the investment document.
What is a Nominee?
Every investment you do comes with a provision in which investors appoints a nominee, even if you are opening a small recurring deposit. The nominee is the person who receives the benefit of investment.
A nominee is a person the policyholder wants to give the benefit of his investment after him/her. Usually, nominees are family members like spouses, children, parents, etc. but in case the policyholder doesn’t have close family members to appoint as a nominee, they appoint someone else like a friend, relatives, etc. Minor can also be named as a nominee, but in that case, you need to provide details of their guardian with their name, relationship with minors, contact information and address.
Interestingly, the nomination is not mandatory in all investments. But it is essential to avoid legal heirs of policyholders getting into unnecessary delays. Without nomination, the legal heir has to produce several documents to claim benefits, like birth certificates, will, succession certificates etc. All these could become a daunting task especially when someone has lost their loved ones.
On the other hand, if the investment already has the name of nominees, the beneficiary has to provide only the ID, address proof and bank details to receive benefits.
Following investments ask for a nominee.
Life insurance policy, bank account, bank fixed deposit, public provident fund, mutual fund.
Can You Have Multiple Nominees In An Investment?
Yes, you can have more than one nominee in any investment, however, the exact nominee number differs from one investment to another. If the nominee will be inheriting the money or possession of the property then in case of multiple nominees one must mention the percentage of ownership for each nominee.
Is it possible to change the name of the nominee?
Yes, of course. You can change the nominee’s name in investment at any point in time. For investments like bank FD, mutual funds, this could be done online. For others, one has to visit the office of investment firms or banks.
