Nomination

NOMINATION

Nomination is a simple way to ensure easy payment of policy money in case of a death claim. As per Section 39 of the Insurance Act, 1938, the holder of a policy on this 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. This can be made at the time of proposal or at any time during the currency of the policy. A person having a policy on the life of another cannot effect a nomination.

A nomination can be changed by the policy holder by making another endorsement on the policy. If space is not available for an endorsement, nomination can be done on a separate piece of paper and pasted onto the policy with the signature of the life assured at the edges where the slip is attached to the policy.

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.

A nomination gives the nominee only the right to receive the 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 (all of it) on behalf of those entitled to it.

When a nominee is minor, an appointee should be appointed by the policyholder. The appointee must affix his signature to the endorsement either in the proposal form or on the text of the policy in token of his having consents to act as an appointee. The life assured have a right to revoke the appointment of the appointee and appoint a fresh appointee. The appointee loses his status when the nominee becomes a major.

When the nominee is a minor and there is no appointee, the claim amount under the policy, cannot be paid to the guardian, appointed or natural. It can be paid only to the legal heirs of the deceased life assured.

When the nominees are more than one, the policy moneys are payable to them jointly or to the survivor or survivors of them. No specific share for each nominee can be made. To do so, would be contrary to the provision of the act, However, a nomination in succession like “Payable to ‘A’, Failing him ‘B’, Failing him ‘C’ etc” is valid.

If the nominee dies after the death of the life assured, but before the payment of the death claim, the policy moneys would form part of the estate of the life assured and would be paid to his representatives. The nomination continues to be operative on the maturity of the policy, in respect of policies where maturity amount is payable in installments after the date of maturity, as in educational annuity policies. Should the life assured die after the date of maturity; the remaining installments can be paid to the nominee. But the nominee has no right to commute future installments payable.