Definition
Beneficial Nominee
A beneficial nominee is a close family member entitled to receive and keep life policy proceeds in their own right, not merely as a custodian for the estate.
Section 39 of the Insurance Act, as amended, gives 'beneficial nominee' status to a policyholder's spouse, children or parents. On the policyholder's death, such a nominee receives the proceeds beneficially, meaning legal heirs cannot lay claim to that money even if they differ from the nominee.
This is a significant protection: an ordinary nominee might only collect proceeds and pass them to the legal heirs, but a beneficial nominee owns them outright. The distinction reduces family disputes and ensures the policyholder's chosen dependents actually benefit.
Related terms
- Assignment of PolicyAssignment is the legal transfer of the rights, title and interest in a life insurance policy from the policyholder to another person or entity.
- NominationNomination is the act of naming a person to receive the policy proceeds on the policyholder's death, without transferring ownership of the policy.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.