Archive / Investment Adviser (Level 2) / Miscellaneous Aspects of Retirement Planning
nism-series-xb-beneficiary-nomination-review-life-events[ INVESTMENT ADVISER (LEVEL 2) ]
Why must a financial adviser conduct regular annual reviews of 'Beneficiary Nominations' across a client's EPF, PPF, NPS, and Mutual Fund folios upon major family life events (marriage, birth, divorce, death)?
[ A ]Because outdated nominations cause automatic cancellation of Indian citizenship.
[ B ]Because banks confiscate all money if a nomination is older than 12 months.
[ C ]Nomination reviews are legally prohibited after retirement.
[ D ]To prevent administrative delays, legal succession disputes, and frozen estate distributions, ensuring nominee records match the testator's latest valid Will and current family composition.[ CORRECT ]
Takeaway
The correct answer is D: regular nomination reviews across EPF, PPF, NPS and mutual fund folios prevent administrative delays and succession disputes by keeping nominee records aligned with the client's current Will and family situation.
Derivation
Nominations made years ago at account opening often go stale -- naming an ex-spouse after a divorce, omitting a newly born child, or contradicting a Will executed later. Because financial institutions release funds to whoever is named as nominee (subject to eventual accounting to legal heirs), a mismatched nomination can freeze disbursement while the family litigates entitlement, or worse, cause funds to reach an unintended person first. A disciplined annual review triggered by marriage, birth, divorce or death closes this gap, keeping the nomination consistent with the client's testamentary intent and reducing friction for the family at a difficult time.
Why the others fail
A — Because outdated nominations cause automatic cancellation of Indian citizenship.
Absurd and legally baseless; nomination status on financial accounts has no bearing on citizenship status under Indian law.
B — Because banks confiscate all money if a nomination is older than 12 months.
Fabricated and false; there is no rule under which banks confiscate funds for nominations older than 12 months.
C — Nomination reviews are legally prohibited after retirement.
False; nomination reviews remain fully permitted and advisable after retirement -- there is no such legal prohibition.
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