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What Is Nomination In Life Insurance

What Is Nomination In Life Insurance

Nomination is a facility that enables a Policyholder to nominate an individual, who can claim the proceeds of the Policy, upon the demise of the Policyholder.

Nomination is dealt with under Section 39 of the Insurance Act, 1938. It lays down that the Policyholder who holds a policy of life insurance on his own life, may nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death.

Where any nominee is a minor, a major should be appointed to receive the money secured by the policy in the event of death of the policyholder during the minority of the nominee. A nomination can be made either at the time of buying the policy or at any time before the policy matures for payment. Any nomination made earlier can be replaced by a new nomination during the term of the policy.

Any such nomination in order to be effectual is required to be incorporated within the policy either by way of a text in the policy itself or by way of an endorsement to the policy. While it is the right of the Policyholder to effect the endorsement, in order to be effective, such nomination should be communicated by the policyholder to the Insurer and registered by the Insurer in the records relating to the policy.

Where a nomination is cancelled or changed by an endorsement or a will and a notice of such change in nomination is given by the policyholder to the Insurer, the Insurer is not liable for any payment made under the policy to a nominee mentioned in the text of the policy or registered in records of the insurer.

Where the policy matures for payment during the lifetime of the Policyholder or where the nominee(s) die before the policy matures for payment, the amount secured by the policy shall be payable to the policyholder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.

Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy-holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.

Insurance
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Where the nominee or, if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors.

The legal position of a nominee in an insurance policy, has been well laid down by the Supreme Court in the Smt. Sarabati Devi and Anr v/s Smt. Usha Devi case where it held that a mere nomination made under Section 39 of the Insurance Act, 1938 does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the accused. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.

Insurance Law And Practice - ICSI

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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