What is the meaning of an appointee in insurance?

The term “Appointee” is synonymous with the term “Nominee.” Both terms can be used interchangeably. The appointee is basically the nominee, and the nominee can also be referred to as an appointee.

Let us now talk about the role, meaning, and importance of an appointee in insurance.

Meaning of an appointee

Let us understand the concept of an appointee with the help of a simple example. Let us assume that Mr. Dastoor has a life insurance policy with SBI Life Insurance. A life insurance policy needs a benefactor.

The appointee acts as the benefactor of a policy. So, Mr. Dastoor decided that the benefactor of his life insurance policy will be his wife, thereby making his wife the appointee of his life insurance policy.

It is a lesser known fact that having an appointee/nominee is not mandatory. That being said, it is absolutely imperative that the policyholder mention an appointee within his policy for streamlining the entire claims disbursement process.

Role of an appointee

• The appointee/nominee can lay claim to the benefits extended by the insurance policy.
• The appointee can enter into correspondence with the insurance company on account of death or disability of the policyholder.
• The appointee can disburse the funds under the policy as he chooses fit. For instance, if the brother is a nominee of a policy, he can choose to distribute the sum assured with his sister.

Importance of an appointee

• Having an appointee saves time and makes the entire process of disbursing the sum assured seamless and streamlined. If there is no appointee, the sum assured will get disbursed equally within all the legal heirs of the policyholder.
• Having an appointee ensures that the money goes to the right hands. The policyholder can specifically choose his desired appointee, ensuring that there is no ambiguity during the claim settlement process. The money goes where the policyholder intended it to go!
• The policyholder can have more than one appointee for any given policy. This provides a great deal of flexibility to the policyholder when it comes to distributing the policy benefits.
• The policyholder can also add successive appointees within a policy. Having successive appointees means that the insurance company will first approach the 1st appointee, if he does not correspond, the insurance company will approach the 2nd appointee to settle the sum assured.