Can a will override a term insurance nomination?

Yes, someone has rightly said, when there is a Will, there is a way! A Will is a legal document of your wishes and such a legal document stands firm in the eyes of law. You are advised to get your Will registered so as to avoid any cause of dispute in the future between your nominees. So, if you don’t have one yet, it's time to write one now! 

A term insurance policy allows you to name someone who has an insurable interest in you, i.e., your demise may cause financial trouble to them. You can easily name a legal or blood relation as your nominee. But if you have some other loved one who isn’t a legal/blood relation (for example, a live-in partner), then naming them as a nominee on your term policy can become difficult because it’s not easy to prove insurable interest in the absence of a blood or legal relation. 

In such a case, your nominee may differ from the one who would actually benefit from the payout. For example, in the live-in partner case, you may want to name your father as the nominee and in your Will name your live-in partner as the person who is entitled to use the policy payout. Your father is merely a recipient in this case.  

Simple! The person mentioned in your Will will prevail. However, the insurer will only give the money to the nominee mentioned in your term plan. Let’s understand with an example:

If the nominee in your policy is your mother but, in your Will, you have mentioned that your father is entitled to receive the insurance pay-out, then the insurer will pay out this money to your mother but your father can still claim it. 

But there is an exception to this - if in your policy you had checked for the MWPA provision, then only your wife and children will get the insurance money. In this case, the nominee mentioned in your Will (if different from your wife or children) will not get the insurance money. 

No, the insurer is obliged to give the term money to the nominee mentioned in the term plan. However, the nominee mentioned in the Will can claim the amount from the recipient. 

So don’t worry, the nominee mentioned in the Will will have the right to receive full or a percentage of your term insurance payout as mentioned in the Will. 

In case you want the money to go to the same person as mentioned in your term plan then putting it down in the Will is not necessary. However, if you want someone else to have the money and not the person mentioned as your term plan nominee, then this is a must! The Will will help settle any dispute between your insurance nominee and the person you actually want to provide the insurance payout to. The Will will bypass any nominee and it will ensure that the person mentioned in the Will will get the insurance payout. 

There is an exception to this though, if in your policy you had checked for the MWPA provision, then only your wife and children will get the insurance money. In this case, the nominee mentioned in your Will (if different than your wife or children) will not get the insurance money. 

Your nominee should be someone with insurable interest in you i.e., they will be financially impacted (in a negative way) by your death. You will need to prove this insurable interest to your insurer. This can be easily done if you have a blood/legal relationship with your nominee. 

So, your nominee can be

1. A family member (parents/spouse/children)

2. A business partner

Remember, if you want to make your minor child a nominee, you need to mention a legal guardian/assignee in your term plan. 

In such an unfortunate situation, you need to first: 

• Inform your insurer about the death of your nominee

• Name a new nominee on your policy

You can name a new nominee on your term policy by*: 

• Getting hold of a change in nomination form online/offline from your insurer 

• Submitting the form with the relevant details and documents 

• Getting an acknowledgement of the nomination change from your insurer

*process may vary from insurer to insurer