Insurance Policy Nomination Vs Assignment

Insurance Policy Nomination Vs Assignment

Insurance Policy Nomination Vs Assignment

Aspects

Nomination

Assignment

What is nomination or assignment? Nomination is the process of appointment of a person to receive the death claim. Assignment is the process of transferring the title of the insurance policy to another person or institution.
When can claim for the nomination of assignment be done? Nomination can be done either at the time of proposal or after the commencement of the policy. Assignment can be done only after commencement of the policy.
Who can make the nomination or assignment? Nomination can be made only by the life assured on the policy of his/her own life. Assignment can be done by owner of the policy either by the life assured if he/she is the policyholder or the assignee.
Where is it applicable? It is applicable only where the Insurance Act, 1938 is applicable. It is applicable all over the world, according to the law of the respective country relating to transfer of property.
Does the policyholder retain control over the policy? The policyholder retains the title and control over the policy and the nominee has no right to sue under the policy. The policyholder loses the right, title and interest under the policy until a reassignment is executed and assignee has a right to sue under the policy.
Is a witness required? Witness is not required. Witness is mandatory.

 

Do they get any rights? Nominee has no right over the policy. Assignee gets full right over the policy and can even sue under policy.
Can it be revoked? Nominee can be revoked or cancelled  at any time during the policy term. The assignment once done cannot be cancelled, but can be reassigned.
In case of minor: In case the nominee is a minor, an appointee has to be appointed. In case the assignee is a minor, a guardian has to be appointed.
What happens in case of the nominee’s or assignee’s death? In case of nominee’s death, the rights of the policy revert to the policyholder or to his/her legal heirs. In case of conditional assignee’s death, the rights on the policy revert to the life assured, based on the terms of assignment. In case of the absolute assignee’s death, his legal heirs are entitled to the policy.
What happens in case of death of the nominee or assignee after the death of In case the nominee dies before the settlement, the policy amount will In case the assignee dies before the settlement, the policy amount is payable to the legal heirs of the
the life assured and before the payment of the death claim? be payable to the legal heirs of the life assured. assignee and not the life-assured, who is the assignor.
Can creditors attach the policy? Creditors can attach the insurance policy, which has a nomination in it. Creditors cannot attach the policy, unless the assignment is shown to have been made to defraud the creditors.