What is a nomination, and why is it necessary? What happens to your financial asset when there is no nomination?

Not having a nomination can prove costly.

Importance of Nomination 

Nomination ensures that the assets get transferred to the beneficiaries upon incapacity or death. It is done to ensure a smooth transfer. An invalid nomination can lead to a tedious and cumbersome transfer process and additional costs and delays. Having a nominee is not mandatory, but we suggest you have them. Several women face difficulties with their deceased husbands' accounts as they do not update the details for a nominee. Ensure it doesn't happen to you by openly discussing and updating nominations. 

Also ReadHow to decide your life insurance nominee?

What Is Nomination?

Let's try and understand the meaning of nomination. A nomination helps assets reach the persons you intend, whether you deal with insurance policies, trusts, wills, or other financial instruments. It is a process wherein you name a person as a beneficiary for your assets. It includes real estate, mutual funds, bank accounts, etc. The beneficiary is known as a nominee. The beneficiary or nominee is entitled to receive the proceeds or benefits of the assets in case of the owner's incapacity or death. 

Importance of Nomination 

A nomination helps your assets transfer to the intended nominees in case of incapacity or death. It makes the transfer process easy and hassle-free. Succession laws are different for different assets and will vary in cases of bank accounts, mutual funds, and shares. 

 What Will Happen If There Is No Nomination?

The asset-transfer process can become tedious and lengthy as it goes through various legal procedures without a valid nomination. It might also lead to added costs and delays. You can avoid these challenges by having a nominee and nomination in place. Without a nominee, the respective regulations and laws will come into effect for the transfer of assets. 

For example, mutual funds and bank accounts are transferred to the owner's (deceased) legal heirs. Without a legal nomination and nominee, the legal heir(s) would have to submit numerous documents to insurance companies, financial institutions, banks, etc., to get the assets and investments transferred to their name. 

Also ReadHow to process death claims without nominees in National Pension System?

Step-By-Step Process For Claiming Nomination Assets

  1. Obtain a letter of administration or a succession certificate from the concerned court. 
  2. Fill out an application for the concerned institution. 
  3. According to the requirement, submit documents such as indemnity bonds, affidavits, death certificates, etc. 

Death Certificate

The death certificate will be required at every institution, whether insurance, fund house, or banks. It confirms the owner's death and is an official record. It also gives the date and time of the death. It is a document that is required regardless of nominations or a will. 


A will makes things smoother if there is no nomination. However, the will must be registered. You would require a "Probate of Will," which the court will provide to attest to the will's validity. The court sends a notice to other applicable heirs for their consent. Speak to your lawyer for more information. 

Succession Certificate

Institutions ask for this certificate if there is no will. It can take time to obtain one. The Indian courts provide a succession certificate to the deceased person's legal heirs if they pass away without a will. 

Indemnity Bond

If the claim amount is not massive, you can use an indemnity bond instead of the succession certificate. However, the bank decides the amount, and the claimant receives the amount accordingly. However, if the legal heir claims the amount, the claimant must return the assets to the rightful heir. 

A nomination is a minor step to safeguard your loved ones. It can lead to major challenges if there is no nomination in place. Ensure you have nominees in all your assets and also a will. Include the legal names of the nominees to avoid conflicts. It ensures your loved ones get your assets hassle-free and easily after your incapacitation or death. 


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