Nomination is a crucial step in securing one’s assets. It ensures that in case of demise, investments are transferred smoothly to the chosen nominee, reducing potential legal complexities and offering financial security to beneficiaries.
Identifying investments
The first step is to identify all the investments that require nomination. This includes bank accounts, fixed deposits, mutual funds, insurance policies, and other financial instruments.Filling nomination forms
Most financial institutions provide nomination forms at the time of investment. If not done initially, investors can fill out the form anytime during the investment period. These forms typically require details like nominee’s name, relation and contact information. The form can be submitted to the respective financial institution after which it usually provides a confirmation, ensuring that the nomination is recorded.
Types of investments
Bank accounts and fixed deposits: Nominations for these can be easily made by submitting a simple form. It is essential to update these nominations regularly, especially after significant life events like marriage or the birth of a child.
Mutual funds: Each folio can have up to three nominees, with the option to specify the percentage of claim for each nominee.
Insurance policies: Nomination in life insurance policies is crucial as it ensures the death benefit is paid to the nominee. Policies can be updated to reflect changes in the policyholder’s life circumstances.
Provident Fund and PPF:Nomination is mandatory for these investments. If not done at the time of account opening, it can be added later.Points to note
- Life changes such as marriage, divorce, or the birth of a child necessitate updates to nominations to ensure they reflect current wishes.
- Nomination does not override a will. In case of a conflict, the will takes precedence.t
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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