Life Insurance Policy
In a life insurance policy, when the policy money becomes due for payment on the death of the policyholder or maturity, it can be paid only to the person who is legally entitled to give a valid discharge to the Life Insurance Company.
If the policy is assigned, the assignee receives the claim amount as per the rules. It should be noted that an assignment of a policy automatically cancels the existing nomination.
Hence, when such a policy is reassigned in favor of the policyholder, it is necessary to make a fresh nomination to avoid delay in payment of the claim.
Assignment:
- Assignment means a transfer of rights, title, and interest.
- When an assignment is executed, all rights, title, and interest in respect of the property assigned are immediately transferred to the Assignee/s and the Assignee/s becomes the owner/s of the policy subject to any lawful condition made in the assignment.
- Assignment can be either conditional or absolute.
- On assignment, Nomination automatically stands canceled.
- Hence, when such a policy is reassigned, the policyholder will have to make a fresh nomination to avoid delay in the settlement of a claim.