What is insurance - 

      Insurance is a plan which ensures certainty of payment for the uncertain loss. The aim of all kinds of insurances to provide help to those who happen to suffer a loss. There are several types of insurance.

Types of insurance - 

1) Life insurance and

2) General insurance -

     (a)Marine insurance
     (b)Fire insurance
     (c)Motor vehicle insurance
     (d)Miscellaneous insurance

3) Reinsurance

Read in detail...Types and Evolution of Insurance in India

Persons entitled to payment under Life insurance - 


         As we all know that Life insurance is a contract that pledges payment of an amount to the person assured or his nominee on the happening of the event insured against. Nobody can predict what will happen in their future life however there is always need to earn income to support yourself and your dependents in case of any eventuality. Life insurance policy provides financial security. The life insurance policy pays you in the wake of unfortunate events such as death or on the inability to earn due to physical disabilities. Life insurance policy covers the risk of contingencies is dependent on human life. For example payment of an amount (which is called sum assured) on the death of of the Life Assured. Further, annuity contracts (which provide for periodic payments to life as sure as long as the policyholder is alive) are the provisions of accident benefits also from part of life insurance business.

The claim monies can be paid to any of the following - 


A) Payee - 


      In the contract of life insurance, the policyholder will not always be the payee but it is the person whose name is entered in the benefits schedule of the policy and who receives the benefits of payment of scheme who is also known as the payee.

B) Assured himself - 


      In the Life insurance contract, life Assured himself in case of policy on own life for living benefit claims ( for example critical illness, disability old age etc.) if in the life insurance contract, life insured services to the full term, then basic sum assured is payable to him only.

C) Assignee or assignment - 


       The expression assignment literally means transfer. the insurance act lays down the mode of assignment and transfer of life insurance policy. an assignment or transfer may be made only on satisfaction of the following conditions -

1) An endorsement upon the policy itself or by a separate instrument;

2) the endorsement or instrument should be signed by the transferor his agent and should be attested by at least one witness;

3) it should specifically set forth the fact of transfer or assignment.

>>>>>>Assignment of Marine Insurance Policy | Insurance Law

D) Nominee - 


       Nomination is governed by Section 39 of the Insurance Act 1938. According to Section 39(1) of the said act 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.

       Provided that, where any nominee is a minor, it shall be lawful for the policyholder to appoint any person in the manner laid down by the insurer, to receive the money secured by the policy in the event of his death during the minority of the nominee.

       (2) Any such nomination in order to be effectual shall, unless it is incorporated in the text 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 text of the policy or registered in records of the insurer.

      (3) The insurer shall furnish to the policyholder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge such fee as may be specified by regulations for registering such cancellation or change.

      (4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination.

       Provided that the assignment of a policy to the insurer who bears the risk 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 reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer's interest in the policy: Provided further that the transfer or assignment of a policy, whether wholly or in part, in consideration of a loan advanced by the transfree or assignee to the policyholder, shall not cancel the nomination but shall affect the rights of the nominee only to the extent of the interest of the transferee or assignee, as the case may be, in the policy: Provided also that the nomination, which has been automatically canceled consequent upon the transfer or assignment, the same nomination shall stand automatically revived when the policy is reassigned by the assignee or retransferred by the transferee in favor of the policyholder on repayment of loan other than on a security of policy to the insurer.

        (5) 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 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.

        (6) 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.

         (7) Subject to the other provisions of this section, where the holder of a policy of insurance on his own life nominates his parents, or his spouse, or his children, or his spouse and children, or any of them, the nominee or nominees shall be beneficially entitled to the amount payable by the insurer to him or them under sub-section (6) unless it is proved that the holder of the policy, having regard to the nature of his title to the policy, could not have conferred any such beneficial title on the nominee.

         (8) Subject as aforesaid, where the nominee, or if there are more nominees than one, a nominee or nominees, to whom sub-section (7) applies, die after the person whose life is insured but before the amount secured by the policy is paid, the amount secured by the policy, or so much of the amount secured by the policy as represents the share of the nominee or nominees so dying (as the case may be), shall be payable to the heirs or legal representatives of the nominee or nominees or the holder of a succession certificate, as the case may be, and they shall be beneficially entitled to such amount.

         (9) Nothing in sub-section (7) and (8) shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of life insurance.

        (10) The provisions of sub-sections (7) and (8) shall apply to all policies of life insurance maturing for payment after the commencement of the Insurance Laws (Amendment) Act, 2015.

        (11) Where a policyholder dies after the maturity of the policy but the proceeds and benefit of his policy has not been made to him because of his death, in such a case, his nominee shall be entitled to the proceeds and benefit of his policy.[Amended by Insurance Act 2015]

       (12) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women's Property Act, 1874, applies or has at any time applied: Provided that where a nomination made whether before or after the commencement of the Insurance Laws (Amendment) Act, 2015, in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section, the said section 6 shall be deemed not to apply or not to have applied to the policy.

E) Legal heirs - 


        The claim is usually payable to nominee/assignee or the legal heirs as the case may be. However, if the deceased policyholder has not nominated/assigned the policy or if he or she has not made a suitable provision regarding the policy sums of money by way of a will, the claim is payable to the holder of a succession certificate or some such evidence of title from a court of law.

F) Appointee - 


    Appointee is entitled to payment of life insurance contract.

Read also...


Objectives of Life Insurance Corporation | Insurance Law

Functions Of Insurance | Insurance Law

Insurance Regulatory and Development Authority
       
Insurable Interest in Life insurance Classification of Insurable Interest in Life insurance (Insurance Law)

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