Definition
Nomination
Nomination is the act of naming a person to receive the policy proceeds on the policyholder's death, without transferring ownership of the policy.
Governed by Section 39 of the Insurance Act, nomination lets the policyholder designate one or more nominees and revise them anytime while the policy is in force. A beneficial nominee (close family such as spouse, children or parents) is entitled to the proceeds in their own right, not merely as a collector for the estate.
Nomination differs from assignment: a nominee only receives the money, whereas an assignee owns the policy. An assignment cancels a nomination. Keeping nominations updated after life events like marriage or divorce avoids disputes and delays in claim settlement.
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.
- Beneficial NomineeA 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.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.