A PROJECT ON

_____________________________________________________________________
NOMINATION OF NOMINEES
(LAW OF INSURANCE)
________________________________________________________________
SUBMITTED TO: Mrs. SANGEETA CHANDA
(Facult !" LAW OF INSURANCE)
SUBMITTED B#: SAGRI$A
ROLL NO. % &'(
)
TH
SEMESTER
&
t*
#EAR

1
AC$NOWLEDGEMENT

I specially owe my gratitude to Mrs. SANEETA C!AN"A #$aculty% INS&RANCE 'A()*
+or pro,idi-g me t.is opportu-ity to wor/ o- t.e pro0ect 1NOMINATION OF
NOMINEES2* a-d w.o was /i-d e-oug. to gi,e me academic support a-d ad,ice +rom time
to time.
I am .ig.ly i-de3ted to my +amily mem3ers +or gi,i-g me t.eir +ull cooperatio-* me-tal
support a-d t.eir lo,e a-d a++ectio-.
'astly* I would li/e to e4press my deep se-se o+ appreciatio- to e,ery3ody directly or
i-directly i-,ol,ed i- t.is pro0ect wor/* all t.roug. t.e ma/i-g o+ it.
2
RESEARCH METHODOLOG#
Aims and Objectives :
The aim of the project is to present a detailed study of the topic NOMINATION
OF NOMINEES through decisions and suggestions and diferent writings and
articles.
Sources of Data:
The following secondary sources of data have been used in the project-
1. Articles!ournals"ocuments#ear $oo%s
2. $oo%s
&. 'ebsites
Method of Writing and Mode of Citation:
The method of writing followed in the course of this research paper is primarily
analytical. A (niform method of citation has been followed throughout the course
of this research paper.
&
TABLE OF CONTENT
5. I-troductio-666666....................................78
9. Nomi-atio- Or Nomi-ees......................................7:
;. Sectio- ;< O+ T.e I-sura-ce Act* 5<;=.................7=
>. Sectio- ;< O+ T.e I-sura-ce Act* 5<;=.................5>
8. Co-clusio-..............................................................+,
?i3liograp.y
)
INTRODUCTION
'i+e i-sura-ce is a co-tract u-der w.ic. t.e i-surer #I-sura-ce Compa-y) i- co-sideratio- o+
a premium paid u-derta/es to pay a +i4ed sum o+ mo-ey o- t.e deat. o+ t.e i-sured or o- t.e
e4piry o+ a speci+ied period o+ time w.ic.e,er is earlier.
I- case o+ li+e i-sura-ce* t.e payme-t +or li+e i-sura-ce policy is certai-. T.e e,e-t i-sured
agai-st is sure to .appe- o-ly t.e time o+ its .appe-i-g is -ot /-ow-. So li+e i-sura-ce is
/-ow- as @'i+e Assura-ceA. T.e su30ect matter o+ i-sura-ce is li+e o+ .uma- 3ei-g. 'i+e
i-sura-ce pro,ides ris/ co,erage to t.e li+e o+ a perso-. O- deat. o+ t.e perso- i-sura-ce
o++ers protectio- agai-st loss o+ i-come a-d compe-sate t.e title.olders o+ t.e policy.
A+ter t.e maturity o+ t.e policy eit.er 3y deat. or 3y t.e .appe-i-g o+ t.e e,e-t i-sured
agai-st* t.e co-tract i- t.e policy is disc.arged 3y payme-t o+ i-sura-ce mo-eyB 3ut t.e- t.e
Cuestio- arises as to w.om s.ould t.e mo-ey 3e paidD It must 3e paid to t.e +ollowi-g
perso-s%
5. Payees
9. T.e assured .imsel+
;. E4ecutors a-d admi-istrators
>. Joi-t +amily mem3ers
8. Eolu-tary assig-ees
F. Nomi-ees or Nomi-atio-
Nomi-atio- is t.e process o+ ide-ti+yi-g a perso- to recei,e t.e policy mo-ey i- t.e e,e-t o+
t.e deat. o+ t.e Policy.older. Nomi-atio- ca- 3e do-e at t.e 3egi--i-g o+ t.e Policy 3y
gi,i-g details o+ -omi-ee i- t.e proposal +orm. !owe,er* i+ t.e -omi-atio- is -ot gi,e- at t.e
3egi--i-g* t.e policy.older ca- gi,e it at a later date. $or t.at purpose a prescri3ed +orm is to
3e +illed up a-d -omi-atio- ca- 3e e-dorsed o- Policy ?o-d.
Accordi-g to law* a -omi-ee is a trustee -ot t.e ow-er o+ t.e assets. I- ot.er words* .e is
o-ly a careta/er o+ your assets. T.e -omi-ee will o-ly .old your mo-eyGasset as a trustee a-d
will 3e legally 3ou-d to tra-s+er it to t.e legal .eirs.
*
NOMINATION !r NOMINEES
NOMINATION%
Nomi-atio- is t.e process o+ ide-ti+yi-g a perso- to recei,e t.e policy mo-ey i- t.e e,e-t o+
t.e deat. o+ t.e Policy.older. Nomi-atio- ca- 3e do-e at t.e 3egi--i-g o+ t.e Policy 3y
gi,i-g details o+ -omi-ee i- t.e proposal +orm. !owe,er* i+ t.e -omi-atio- is -ot gi,e- at t.e
3egi--i-g* t.e policy.older ca- gi,e it at a later date. $or t.at purpose a prescri3ed +orm is to
3e +illed up a-d -omi-atio- ca- 3e e-dorsed o- Policy ?o-d.
Nomi-atio- is a rig.t co-+erred o- t.e .older o+ a Policy o+ 'i+e Assura-ce o- .is ow- li+e to
Appoi-t a perso-Gs to recei,e policy mo-eys i- t.e e,e-t o+ t.e policy 3ecomi-g a claim 3y
t.e assuredAs deat.
5
.
NOMINEES%
(.e- a perso- is -amed i- proposal +orm as t.e perso- +or w.ose 3e-e+it t.e i-sura-ce is
e++ected suc. perso- w.ose -ame is me-tio-ed is called t.e nominee. T.e i-surer agrees wit.
t.e assured t.at .e would pay t.e assured amou-t to t.e -omi-ee i- t.e case o+ t.e deat. o+
t.e assured. Accordi-g to law* a -omi-ee is a trustee -ot t.e ow-er o+ t.e assets. I- ot.er
words* .e is o-ly a careta/er o+ your assets. T.e -omi-ee will o-ly .old your mo-eyGasset as
a trustee a-d will 3e legally 3ou-d to tra-s+er it to t.e legal .eirs. $or most i-,estme-ts* a
legal .eir is e-titled to t.e deceasedAs assets. $or i-sta-ce* Section 39 o+ t.e I-sura-ce Act
says t.e appoi-ted -omi-ee will 3e paid* t.oug. .e may -ot 3e t.e legal .eir. T.e -omi-ee*
i- tur-* is supposed to .old t.e proceeds i- trust a-d t.e legal .eir ca- claim t.e mo-ey.
Nomi-ee ca- also 3e o-e o+ t.e legal .eirs.
(!H CONCEPT O$ NOMINEED%
So you mig.t 3e wo-deri-g* i+ t.e -omi-ee does -ot 3ecome t.e sole ow-er* w.y does suc. a
co-cept o+ 1-omi-ee2 e4ist at allD ItAs pretty simple. (.e- you die* you wa-t to ma/e sure
t.at t.e I-sura-ce compa-y* Mutual +u-d or your s.ares s.ould at least get out o+ t.e
compa-ies a-d go to someo-e you trust* a-d w.o ca- +urt.er .elp* i- process o+ passi-g it to
1
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+
your legal .eirs. Ot.erwise* i+ a perso- dies a-d .as-At -omi-ated a-yo-e* your legal .eirs
will .a,e to go t.roug. t.e process o+ produci-g all /i-d o+ certi+icates li/e deat. certi+icates*
proo+ o+ relatio- etc.* -ot to me-tio- t.at t.e w.ole process is really cum3ersomeI #$or eac.
legal e-tityI T.e i-sura-ce compa-y* t.e mutual +u-ds* +or t.e s.ares* +or t.e real estate..).
So* to simpli+y* i+ a -omi-ee e4ists* t.ese .assles do-At .appe-* si-ce t.e compa-y is 3ou-d
to tra-s+er all your mo-ey or assets to t.e -omi-ee. T.e compa-y t.e goes out o+ sce-e J
t.e-* itAs 3etwee- -omi-ee a-d legal .eirs.
,
SECTION -. OF THE INSURANCE ACT/ +.-):
T.e positio- relati-g to -omi-ee i- I-dia 3e+ore t.e i-sura-ce act 5<;= was t.e same as t.at
i- E-gla-d. T.e I-dia- law was co-tai-ed i- ss 5;9 a-d 5;8 o+ t.e tra-s+er o+ property act
9
.
T.e co-cept o+ t.e -omi-atio- is i-corporated i- 1T.e i-sura-ce act* 5<;=2 K.erei-a+ter
called as @ActAL. Section 39 o+ t.e act deals wit. t.e -omi-atio- a-d t.e matters related to it.
T.e .older o+ a policy o+ li+e i-sura-ce o- .is ow- li+e may -omi-ate t.e perso- or perso- to
w.om .e wa-ts t.e policy mo-ey to 3e paid i- t.e e,e-t o+ .is deat..
Section 39 states as +ollows%
39. Nomination by policy holder.
1. The holder of a policy of life insurance on his own life may, when effecting the
policy or at any time before the policy matures for payment, nominate the person or persons
to whom the money secured by the policy shall be paid in the event of his death: rovided
that, where any nominee is a minor, it shall be lawful for the policy! holder to appoint in the
prescribed manner any person to receive the money secured by the policy in the event of his
death during the minority of the nominee.
". #ny such nomination in order to be effectual shall, unless it is incorporated in the
te$t of the policy itself, be made by an endorsement on the policy communicated to the
insurer and registered by him in the records relating to the policy and any such nomination
may at any time before the policy matures for payment be cancelled or changed by an
endorsement or a further endorsement or a will, as the case may be, but unless notice in
writing of any such cancellation or change has been delivered to the insurer, the insurer shall
not be liable for any payment under the policy made bona fide by him to a nominee
mentioned in the te$t of the policy or registered in records of the insurer.
3. The insurer shall furnish to the policy! holder a written ac%nowledgment of having
registered a nomination or a cancellation or change thereof, and may charge a fee not
e$ceeding one rupee for registering such cancellation or change.
&. # transfer or assignment of a policy made in accordance with section 3' shall
automatically cancel a nomination: rovided that the assignment of a policy to the insurer
who bears the ris% on the policy at the time of the assignment, in consideration of a loan
granted by that insurer on the security of the policy within its surrender value, or its re!
2
Mulraj khataw v. Vishwanath 37 Bom 198 (PC).
-
assignment on repayment of the loan shall not cancel a nomination, but shall affect the rights
of the nominee only to the e$tent of the insurer( s interest in the policy.
). *here the policy matures for payment during the lifetime of the person whose life
is insured or where the nominee or, if there are more nominees than one, all the nominees die
before the policy matures for payment, the amount secured by the policy shall be payable to
the policy! holder or his heirs or legal representatives or the holder of a succession
certificate, as the case may be.
+. *here the nominee or if there are more nominees than one, a nominee or nominees
survive the person whose life is insured, the amount secured by the policy shall be payable to
such survivor or survivors.
,. The provisions of this section shall not apply to any policy of life insurance to
which section + of the -arried *omen( s roperty #ct, 1',& .3 of 1',& /, applies or has at
any time applied: rovided that where a nomination made whether before or after the
commencement of the 0nsurance .#mendment/ #ct, 19&+ .+ of 19&+ /, in favour of the wife of
the person who has insured his life or of his wife and children or any of them is e$pressed,
whether or not on the face of the policy, as being made under this section, the said section +
shall be deemed not to apply or not to have applied to the policy.
A policy.older ca- appoi-t multiple -omi-ees a-d ca- also speci+y t.eir s.ares i- t.e policy
proceeds. Nomi-atio- i- li+e i-sura-ce .as one limitation* as i-sura-ce policies are 3oug.t to
secure your +i-a-cial depe-de-tsB your +irst c.oice o+ -omi-ee .as to 3e your +amily
mem3ers. I- case you wa-t to -omi-ate a -o-M+amily mem3er li/e a +rie-d or t.ird party* you
will .a,e to s.owGPROEE t.e i-sura-ce compa-y t.at t.ere is some i-sura3le i-terest +or t.e
perso-. T.is .appe-s 3ecause o+ a Clause called PRINCIPA' O$ INS&RA?'E INTEREST
i- i-sura-ce.
(.e- a perso- is -amed i- proposal +orm as t.e perso- +or w.ose 3e-e+it t.e i-sura-ce is
e++ected suc. perso- w.ose -ame is me-tio-ed is called t.e nominee. T.e i-surer agrees wit.
t.e assured t.at .e would pay t.e assured amou-t to t.e -omi-ee i- t.e case o+ t.e deat. o+
t.e assured. T.e -omi-ee is a t.ird party to t.e co-tract a-d .e is -eit.er a party to t.e
co-tract -or .as pri,ity wit. it so i- case o+ 3reac. o+ payme-t 3y t.e i-surer* .e ca--ot
reco,er t.e amou-t 3y suit. E,e- i+ t.e mo-ey is paid to suc. perso- .e ca--ot gi,e a ,alid
disc.arge to t.e i-surer. T.e o-ly perso-s e-titled to recei,e or sue or gi,e ,alid disc.arge are
t.e e4ecutors or admi-istrators or ot.er legal represe-tati,es o+ t.e deceased assured.
.
!ousema- o3ser,es%
1the fact that a policy may be e$pressed to be for the benefit of some third party will
not be of itself suffice to give that third party any right of property in the policy or in the
policy money either at law or in e1uity.
3
2
T.e o30ect o+ t.e section 39 appears to 3e to empower t.e -omi-ee merely wit. t.e power to
collect t.e mo-ey due u-der t.e policy a-d to ma/e it clear t.at t.e -omi-atio- itsel+ does -ot
co-+er a-y title o- t.e -omi-ee i- t.e mo-ey recei,ed. It o-ly empowers t.e -omi-ee to gi,e
a ,alid disc.arge to t.e i-surer a-d clot.es .im wit. t.e rig.t to sue a-d to t.e e4te-t o-ly t.e
law seems to .a,e 3ee- c.a-ged. T.e -omi-ee does -ot 3ecome t.e 3e-e+icial ow-er o+ t.e
mo-ey so recei,ed a-d it .as 3ee- .eld t.at .e is lia3le to .old t.e mo-ey i- trust a-d +or t.e
3e-e+it o+ t.e legal represe-tati,es o+ t.e deceasedB .e .ad to ultimately .a-d o,er t.e mo-ey
to t.em. $or e4ample* i- Saro2ini #mma v Ncela%antha illai it .as 3ee- .eld t.at a -omi-ee
u-der a policy o+ li+e i-sura-ce .as a 3are rig.t to collect t.e mo-ey paya3le u-der t.e policy
o- t.e deat. o+ t.e assured a-d gi,e a good disc.arge to t.e i-surer. T.e -omi-ee does -ot
3ecome t.e ow-er o+ t.e mo-ey due u-der t.e policy a-d .e is lia3le to ma/e it o,er to t.e
legal represe-tati,es o+ t.e assured. T.us t.e -omi-ee acts o-ly as a recei,er.
?ut i- Nesari "c,i , ".arma "e,i a di++ere-t ,iew is e4pressed t.at t.ere is -ot.i-g i- s ;<
to suggest t.at t.e -omi-ee recei,ed t.e mo-ey merely as a trustee or age-t o+ t.e assuredAs
legal represe-tati,esB s ;< does -ot lay dow- t.at .e is u-der a-y lia3ility to accou-t +or t.e
mo-ey recei,ed to a-y perso-. T.e o3,ious mea-i-g o+ t.e la-guage used i- su3M ss 5 a-d F
is t.at t.e i-sura-ce compa-y must pay t.e mo-ey to .im a-d .e is le+t to deal wit. it i- a-y
ma--er .e li/es. T.e lear-ed C.ie+ Justice co-ti-ued%
@*e do not thin% it is the universal rule or rule of 2ustice, e1uity and good conscience
that the policy money that is paid to a nominee under s 39.+/ is held by him as trustee for the
legal representatives of the assured
>
.A
T.e same ,iew was reiterated i- 3ma v. 4wara%adas
)
a-d also e4pressed at t.e co-tro,ersy
a-d also ga,e a 3ig list o+ co-+licti-g decisio-s. It is respect+ully su3mitted t.at t.e Alla.a3ad
a-d "el.i ,iew appears to 3e erro-eous a-d i+ t.at was correct su3Ms : 3ecomes otiose.
&
/ouseman0 Law of lif assuran!" P. 1#$.
)
A12 1.+) All &**.
*
A12 1.-* A3 *-.
14
I- 506 v. Nirmala #di 7eddy t.e widow a-d c.ildre- o+ t.e deceased i-sured w.o .ad
-omi-ated .is policy i- +a,our o+ .is mot.er dema-ded t.e 'IC as legal .eirs o+ t.e assured
to pay t.eir s.ares o+ t.e sum assured to t.em. ?ut t.e 'IC i-sisted t.at payme-t would 3e
made o-ly to t.e -omi-ee u-less t.ey are stopped 3y a stay order +rom t.e court. T.e legal
.eirs t.ereupo- +iled t.is suit w.ic. ordered t.e 'IC to pay t.eir s.ares to t.em i- spite o+ t.e
-omi-atio- +ollowi-g t.e Supreme Court decisio- i- Sa3ita "e,iOs case a-d ordered t.e 'IC
to pay t.e plai-ti++As cost as t.e 'ICAs sta-d was -ot 0usti+ia3leDA I- Sabita devi v. 3sha 4evi a
perso- i-sured .is li+e a-d appoi-ted .is wi+e &s.a "e,i as -omi-ee to recei,e t.e sum
assured o- .is deat.. Sometime later .e died* lea,i-g 3e.i-d .is wi+e* so- As.o/ Numar a-d
mot.er Sa3ita "e,i as .is -earest legal .eirs. O- t.e stre-gt. o+ t.e -omi-atio- &s.a "e,i
claimed a3solute rig.t to t.e sum assured to t.e e4clusio- o+ t.e ot.er two legal .eirs. T.e
Supreme Court dismissed .er claim a-d .eld% A mere -omi-atio- made u-der s ;< does -ot
.a,e t.e rig.t o+ co-+erri-g o- t.e -omi-ee a-y 3e-e+icial i-terest i- t.e amou-t paya3le
u-der t.e li+e i-sura-ce policies o- t.e deat. o+ t.e i-sured. T.e -omi-atio- o-ly i-dicates
t.e .a-d w.ic. is aut.orised to recei,e t.e amou-t o- t.e payme-t o+ w.ic. t.e i-surer gets a
,alid disc.arge o+ its lia3ility u-der t.e policy. T.e amou-t .owe,er ca- 3e claimed 3y t.e
.eirs o+ t.e assured i- accorda-ce wit. t.e law o+ successio- go,er-i-g t.em...t.e la-guage
o+ s ;< is -ot capa3le o+ alteri-g t.e course o+ successio- u-der t.e law* Also t.ere is -o
warra-t +or t.e positio- t.at s ;< operates as a t.ird /i-d o+ successio- w.ic. is styled as a
@Statutory Testame-tary dispositio- i- &ma Se.galOs case.
T.is sectio- merely declares t.e e4isti-g law t.at a policy .older* w.o e++ects i-sura-ce o-
.is ow- li+e* i- .is discretio- may -omi-ate a-y perso- .e li/es. !e may appoi-t e,e- a
mi-orB 3ut w.e- .e appoi-ts a mi-or as a -omi-ee .e may appoi-t some ot.er ma0or to
recei,e t.e mo-ey i- case o+ deat. o+ t.e mi-or. Suc. a perso- almost acts as a- ad .oc
guardia- +or t.e mi-or -omi-ee. Nomi-atio- ca- 3e made eit.er 3y i-corporati-g suc.
-omi-atio- i- t.e te4t o+ t.e policy or 3y a- e-dorseme-t o- t.e policy. I- t.e case o+
-omi-atio- 3y e-dorseme-t it must 3e commu-icated to t.e i-surer w.o registers it i- .is
records. &-less t.e -omi-atio- is commu-icated a-d registered it will -ot 3e e++ecti,e.
'i/ewise a ca-cellatio- o+ a -omi-atio- ca- also 3e made 3y a- e-dorseme-t. It is made
o3ligatory o- t.e part o+ t.e i-surer to register it i- records a-d to +ur-is. a-
ac/-owledgeme-t o+ t.e commu-icatio- o+ eit.er t.e -omi-atio- or ca-cellatio- to t.e policy
.older. Nomi-atio- does -ot a++ect t.e title to t.e mo-ey secured 3y t.e policy. T.e policy
11
.older co-ti-ues to 3e t.e Ow-er wit. a power o+ dispositio- o,er suc. i-sura-ce mo-ey
w.ic. .e ca- e4ercise eit.er 3y tra-s+er or assig-me-t or +urt.er e-dorseme-t o- willD A
-omi-atio- may 3e ca-celled e,e- 3y co-duct* +or e4ample* t.e assured ma/es a -omi-atio-
i- a- e-dowme-t policy a-d t.e assured 3ei-g ali,e at t.e date o+ maturity .imsel+ directly
collects t.e 3e-e+its* t.e -omi-atio- is deemed to .a,e 3ee- ca-celled 3y co-duct. Agai-
t.ere is a- automatic ca-cellatio-* accordi-g to su3Ms > o+ s ;<* w.e- t.e policy .older
su3seCue-t to -omi-atio- ma/es a- assig-me-t o+ t.e policy u-der s ;= to some ot.er
perso-
F
. ?ut a- e4ceptio- .as 3ee- pro,ided to t.is automatic ca-cellatio- rule i- t.e a3o,e
su3Msectio-* i- case w.ere t.e assig-me-t o+ t.e policy .as 3ee- made to t.e i-surer w.o .as
gra-ted a loa- - t.e security o+ policy wit.i- its surre-der ,alue or w.e- t.e policy is
reassig-ed o repayme-t o+ t.e loa-. I- suc. cases t.e -omi-atio- sta-ds good su30ect to t.e
i-terest o+ t.e assig-ee t.e creditor i-surer. T.is i- e++ect mea-s* i+ t.e perso- dies* t.e
-omi-ee is e-titled to recei,e o-ly t.e 3ala-ce o+ t.e amou-t +rom t.e i-sura-ce compa-y.
&-der su3Ms 8 i+ t.e policy matures duri-g t.e li+etime o+ t.e assured or o+ t.e -omi-ee* or i+
t.ere are more -omi-ees t.a- o-e a-d i+ t.e -omi-ee or all t.e -omi-ees die 3e+ore t.e
policy matures t.e amou-t paya3le u-der t.e policy o- its maturity 3ecomes paya3le to t.e
assured or .is .eirs or legal represe-tati,es as t.e case may 3e. (.ere t.e -omi-ee or
-omi-ees die 3e+ore t.e policy 3ecomes mature +or payme-t t.e amou-t is paya3le to t.e
assured* i+ ali,e* i+ -ot to .is .eirs. ?ut i+ t.e -omi-ees sur,i,e t.e assured w.o died 3e+ore
maturity o+ t.e policy 3e+ore payme-t a fortiory* t.e -omi-ee would 3e e-titled to recei,e
payme-t. I+ t.e -omi-ee dies a+ter maturity 3ut 3e+ore recei,i-g t.e payme-t .is .eirs a-d
-ot t.e .eirs o+ t.e assured would 3e e-titled to recei,e t.e payme-t.
S&CCESSIEE NOMINEE%
(.ere it is me-tio-ed i- -omi-atio- t.at t.e policy mo-ey s.ould 3e paid to 1Nomi-ee A
+aili-g .im to Nomi-ee ? w.om +aili-g to Nomi-ee C* etc.2* suc. -omi-atio- is called
successi,e -omi-atio-. Suc. -omi-atio- would 3e i- +a,our o+ o-e i-di,idual i- t.e order
me-tio-ed. All suc. Nomi-atio- would mea- t.at i+ Nomi-ee A were dead at t.e time i-
Cuestio- t.e Nomi-ee ? would ta/e t.e w.ole amou-t a-d t.at i+ 3ot. Nomi-ees A a-d ?
were t.e- dead t.e- Nomi-ee C would ta/e t.e w.ole amou-t a-d so o-.
+
%asikal v. L&C of &n'ia.
12
ASSIGNMET AND NOMINATION DISTINGUISHED:
Nomi-atio- a-d assig-me-t are t.e two suc. terms w.ic. a policy.older must 3e aware o+ to
e++ecti,ely ma-age t.e 3e-e+its accrui-g u-der a li+e i-sura-ce policy. Nomi-atio- is a- act
3y w.ic. t.e policy.olders aut.orises a-ot.er perso- to recei,e t.e policy mo-ey. T.e perso-
so aut.orised is called a @-omi-eeA. Nomi-atio- is a rig.t gi,e- to t.e li+e i-sura-ce
policy.older to appoi-t a perso- or perso-s to recei,e t.e 3e-e+it u-der t.e policy i- case it
3ecomes a deat. claim. Assume i+ a perso- w.o is i-sured dies* t.e -omi-ee is e-titled to
recei,e t.e policy proceeds su30ect to certai- co-ditio-s.
(.ile applyi-g +or li+e i-sura-ce* t.e i-di,idual s.ould me-tio- t.e -omi-ee details i- t.e
proposal +orm. T.e details o+ t.e -omi-ee will 3asically i-clude +ull -ame* age* address o+ t.e
-omi-ee a-d -omi-eeAs relatio-s.ip wit. t.e li+e assured. Accordi-g to Sectio- ;< o+
I-sura-ce Act* 5<;=* o-e ca- .a,e multiple perso-s as -omi-ees a-d ca- also speci+y t.eir
s.ares o+ t.e policy proceeds i- perce-tage terms.
"o e-sure t.at i- all your policy co-tracts you .a,e appoi-ted t.e -omi-ee. T.e policy.older
s.ould also re,iew -omi-atio- w.e-e,er reCuired. !e s.ould c.a-ge t.e -omi-atio- a+ter
marriageGdi,orce a-d also i+ -omi-ee .as died 3e+ore t.e policy.older. Policy proceeds u-der
a deat. claim usually comprise t.e sum assured a-d t.e 3o-uses accrued #i+ a-y). I- case o+
&'IPs #u-itMli-/ed i-sura-ce pla-s)* t.e -omi-ee would recei,e mar/et ,alue o+ u-its a-d t.e
sum assured.
Assig-me-t o+ a li+e i-sura-ce policy mea-s tra-s+er o+ rig.ts +rom o-e perso- to a-ot.er.
T.e policy.older ca- tra-s+er t.e rig.ts o+ .is i-sura-ce policy to a-ot.er +or ,arious reaso-s
a-d t.is process is called assig-me-t.
T.e origi-al policy.older w.o assig-s t.e policy* i.e. tra-s+ers t.e rig.ts* is called t.e
1assig-or2 a-d t.e o-e to w.om t.e policy .as 3ee- assig-edPt.e perso- to w.om t.e
policy rig.ts .a,e 3ee- tra-s+erredPis called t.e 1assig-ee2. O-ce t.e rig.ts .a,e 3ee-
tra-s+erred to t.e assig-ee* t.e assig-or .as -o rig.t o- t.e policy* a-d t.e assig-ee 3ecomes
t.e ow-er o+ t.e policy.
1&
O-e ca- usually come across a- assig-me-t w.ere t.e policy.older is tryi-g to use t.e li+e
i-sura-ce policy as collateral agai-st a loa- .e i-te-ds to raise. Assig-me-t must 3e i-
writi-g a-d a -otice to t.at e++ect must 3e gi,e- to t.e i-surer.
Assume* Mr Q 3uys a .ouse +or w.ic. .e -eeds a .ome loa- o+ Rs. 98 la/. +rom a 3a-/. Mr
Q ta/es a .ome loa- agai-st .is policy o+ sum assured Rs. 98 la/.. To ta/e a loa- +rom t.e
3a-/* .e assig-s t.e policy to t.at 3a-/* a-d t.e- t.e 3a-/ would 3e a3le to pay out t.e loa-
mo-ey to .im. I+ Mr Q +ailed to repay t.e loa-* t.e- t.e 3a-/ would surre-der t.e policy a-d
get t.eir mo-ey 3ac/. T.e origi-al policy.older will pay t.e premium 3e+ore or o- t.e
payme-t due date a-d -ot t.e 3a-/.
Assig-me-t a-d Nomi-atio- t.oug. loo/s similar to eac. ot.er 3ut .a,e a lot o+ di++ere-ces.
T.e pro,isio- +or go,er-i-g t.e assig-me-t is stated i- sectio- ;= o+ t.e act. T.e mai- poi-ts
o+ di++ere-ce 3etwee- a- assig-me-t a-d a -omi-atio- are%
#5) A- assig-me-t passes to t.e assig-ee t.e rig.t to t.e i-sura-ce mo-ey. T.e -omi-ee o-
t.e ot.er .a-d* gets -o rig.ts a-d .olds t.e mo-ey +or t.e 3e-e+it o+ t.e estate o+ t.e deceased
assured.
#9) O-ce a- assig-me-t is made it ca--ot 3e ca-celled at t.e optio- o+ t.e assig-or. It creates
a ,ested rig.t i- t.e assig-ee. Su30ect o-ly to t.e eCuities 3etwee- t.e assig-or a-d t.e
i-surer. O- t.e ot.er .a-d* a -omi-atio-* u-less t.ere is a special clause i-serted to ma/e it
irre,oca3le* does -ot depri,e t.e policyM.older o+ .is rig.ts* etc. u-der t.e policy i-cludi-g
t.e rig.t to alter t.e -omi-ee.
#;) A- assig-ee gets t.e rig.t to +urt.er deal wit. t.e policy* +or .e 3ecomes a policyM.older*
3ut -omi-ee gets -o suc. rig.ts.
#>) A- assig-ee is e-titled to t.e mo-ey e,e- i+ t.e assured sur,i,es t.e policyB 3ut i- t.e
case o+ -omi-atio- i+ t.e assured is ali,e at t.e time o+ maturity* -omi-ee gets -o rig.ts.
CONCLUSION
1)
Accordi-g to law* a -omi-ee is a trustee -ot t.e ow-er o+ t.e assets. I- ot.er words* .e is
o-ly a careta/er o+ your assets. T.e -omi-ee will o-ly .old your mo-eyGasset as a trustee a-d
will 3e legally 3ou-d to tra-s+er it to t.e legal .eirs.
Now you /-owI Ta/i-g Perso-al +i-a-ce +or gra-ted ca- 3e +atalI Just i-,esti-g /-owledge*
is-At e-oug. to .a,e a great +i-a-cial li+e. Hou also -eed to 3e well ,ersed wit. 3asic legal
aspects a-d ma/e sure you carry out all due arra-geme-t. Nomi-atio- is o-e importa-t aspect
you s.ould seriously co-sider* w.e- c.ec/i-g +or t.e +i-a-cial products you .a,e 3oug.t or
pla- to 3uy i- +uture.
ItAs importa-t to ma/e sure t.at your lo,ed o-eAs do -ot +ace legal issues a-d o-ly say a-d
t.i-/ lo,ely t.oug.ts a3out you w.e- you are -ot arou-d* rat.er t.a- cri3 J grum3leI

BIBLIOGRA0H#
BOO$S
1*
5. Si-g. A,tar* 'aw o+ I-sura-ce* 9
-d
editio- 9757* Easter- ?oo/ compa-y.
9. Murt.y N S N J "r. S.arma NES* Moder- law o+ I-sura-ce* >
t.
editio- 9779* 'e4is
Ne4is ?uttorwort.s (ad.wa.
WEBSITES
5. .ttp%GGwww.+lame.org.i-GN-owledgeCe-terGNomi-atio-,sassig-me-ti-li+ei-sura-c
epolicy.asp4
9. .ttp%GGC-a.eco-omictimes.i-diatimes.comGPerso-alM$i-a-ceGI-sura-ceGw.atMisMt.eM
di++ere-ceM3etwee-M-omi-atio-Ma-dMassig-me-tM>8==8:..tml
1+