Saturday, April 17, 2010


Section 39 of Insurance Act, 1938 provides for nomination under a life insurance policy. Nomination is a simple way to ensure easy payment of policy moneys in the event of a death claim

The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, 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 minor, it shall be lawful for the policyholder to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his/her death during the minority of the nominee.

Nomination can be made at the time of filling up the proposal form which can be incorporated in the text or schedule of the policy bond. If nomination has not been effected at the proposal stage, it can be made afterward at any time before the maturity of the policy by serving a notice of nomination to the insurer in the prescribed form regarding first nomination. Such nomination may be made at any time before the policy matures for payment. Nomination can be cancelled or changed by the policyholder by making an endorsement or a will, as the case may be. The insurer shall furnish to the policyholder a written acknowledgement of having registered a nomination or a cancellation or change thereof.

When a policy is assigned, the existing nomination is automatically cancelled. The assignee, not being the life assured, cannot make a nomination. When the policy is reassigned to the life assured, he will have to make a fresh nomination. An assignment made in favour of the insurer, in consideration of a loan granted against the security of the policy, does not cancel the nomination.

A nomination gives the nominee only the right to receive he policy moneys in the event of death of the life assured. A nominee does not have any right to the whole (or part) of the claim. He only has the right to give a valid discharge but has to hold the moneys on behalf of those entitled to it.

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