Nomination: an important aspect of the investment

Each time you complete a form for an investment, either a fixed deposit or insurance, stocks or a Investment fund or even if you are opening a new bank account, there will be a separate section that will ask you to mention a Nominee. Often, many people who invest or open an account leave this column blank, but it shouldn't be that way, and here's why.

What is the nomination?

The nomination is a facility that allows the holder of a deposit account, investor Investment fund /other financial instruments or the holder of the secure deposit locker to nominate a person, who can claim the income from the deposit account, the investment or the contents of the secure deposit locker, publish the disappearance of the depositor, investor or holder of the original locker.

Who is a nominee?

A Nominee is a person whom you can include in your investment or bank application as the person who can receive income from your account in the event of your unexpected death.

The nominee can be anyone who considers their first relative: their parents, spouse, children, siblings, etc. Some investments also allow you to have multiple nominees to whom you can assign percentages of your money to each of them. If you do not specify percentages, it is shared equally.

Why nominate someone?

In the case of the unfortunate event of one's disappearance, the family/close relatives go through a very painful time and difficult to cope with the loss. To add to this, whether we like it or not, financial security and the means are necessary for the surviving partner or their loved ones. All financial institutions have standard and simpler processes to resolve death claims, where the nomination is clearly mentioned in the account or in the publication.

However, in the absence of a nomination, the process of resolving a death claim may require a large number of documents, including deaths, certificates of succession, a will or a court order. Although it may seem simple on paper, it ends up being a long process in real life and is not a situation where you would like to put your loved ones at the same time, which would still be an emotional situation for them anyway.

Why is the nomination critical?

The nomination is a critical activity that many of us miss, which eventually creates an unwanted nuisance for those closest to us.

There are surprising RBI data that show billions of unclaimed deposits in banks across the country. These are deposits that are in accounts where the original owner has not claimed the money, or has died and had not submitted the details of the nomination. This alone is proof of how difficult it can be to recover your money where a nomination is not made.

Points to remember when making the nomination:

  1. Mention the full name, age, address and your relationship with the nominee.
  2. Do not write the nomination in favor of wife and children as a class. Give your specific names and details existing at that time.
  3. If the candidate is a minor, designate a person who is older as a designated person to give their full name, age, address and relationship with the candidate.
It is advisable to take some time to regularize the nomination in all your financial instruments, assets, bank accounts and lockers. It will help you when you need it most.

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