Nomination

What is nomination in insurance?

Nomination is the instruction a policyholder gives the insurer about who should receive the claim money if the policyholder dies. The person named is the nominee. In life insurance, nomination is made under Section 39 of the Insurance Act, 1938. It tells the insurer whom to pay, so the claim can be settled without the family having to produce a succession certificate. Whether the nominee then keeps the money depends on who the nominee is, a point explained in nominee vs legal heir.

How nomination works in India

The statute (life insurance). Section 39, as substituted by the Insurance Laws (Amendment) Act, 2015 with effect from 26 December 2014, says (as of October 2026):

• A holder of a policy on their own life can nominate one or more persons, when taking the policy or at any time before it matures.
• If a nominee is a minor, the policyholder can appoint a person (often called the appointee) to receive the money while the nominee is a minor.
• The nomination must be in the policy text or endorsed and registered by the insurer. It can be changed or cancelled before maturity by endorsement or by a will, but the insurer is protected if it pays the registered nominee in good faith before it receives written notice of a change.
• The insurer must give a written acknowledgement of a nomination, change or cancellation.
• An assignment under Section 38 cancels the nomination, except a loan assignment to the insurer or to a lender, where the nominee's rights are reduced only to the extent of the lender's interest. A nomination cancelled by assignment revives when the policy is reassigned to the policyholder after the loan is repaid.
• If the policyholder nominates their parents, spouse, children, or spouse and children, those nominees are beneficially entitled to the money. Other nominees receive the money but, under long-standing case law, hold it for the legal heirs.
• If all nominees die before the policyholder, the money goes to the policyholder's heirs. If a beneficial nominee dies after the policyholder but before payment, that nominee's share goes to the nominee's own heirs.
• Creditors' rights to be paid from the policy proceeds are not defeated by a nomination.
• Section 39 does not apply to a policy written under Section 6 of the Married Women's Property Act.

The 2024 regulations. The IRDAI (Protection of Policyholders' Interests, Operations and Allied Matters of Insurers) Regulations, 2024 add:

• Life insurers cannot accept a proposal without a nomination.
• General and health insurers must obtain a nomination for individual and group policies at issue and at every renewal.
• No fee for a nomination made when the policy is taken. A change or cancellation can cost at most ₹100 each time.
• A nomination recorded in the policy schedule, or in an endorsement accepting a change, counts as the insurer's valid acknowledgement.

The 2024 master circular confirms that a policyholder may name several nominees and specify each one's percentage share, and that insurers should register a nomination change within 7 days of the request.

The 2025 amendment. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, in force from 5 February 2026, rewrote Section 14 so that an insurer's record of each policy must include any transfer, assignment or nomination it has notice of. It did not change Section 39.

What nomination means for distribution

A missing or wrong nomination is one of the most avoidable reasons a family waits months for a claim.

• Never leave it blank or generic. Write the nominee's full name, relationship, date of birth and share. "Legal heirs" or "family" is not a usable nomination.
• Ask whether the customer wants the nominee to own the money. Naming a parent, spouse or child makes them a beneficial nominee. Naming a sibling or friend makes them a collector for the heirs, which may not be what the customer intends.
• Use the appointee for minors. If a child is nominated, name an appointee, and update it when the child turns 18.
• Review at life events and renewals. Marriage, divorce, birth, death in the family and a home loan all change who should be named. General and health renewals now require the nomination to be captured, which gives every renewal call a natural reason to check it.
• Explain what assignment does. Customers who assign a policy to a bank for a loan should know it affects the nominee. The second proviso to Section 39(4) protects the nominee for the balance, but only if the paperwork is right.
• Capture nominee bank details. The 2024 rules ask for the nominee's bank details in the proposal form, which speeds up payment.