The nominee is statutorily recognized as a payee who can give a valid discharge to the Corporation for the payment of policy monies.
Nomination does not supersede rights of legal heir.
Nominee is the hand to receive the proceeds. Nominee is duty bound to divide the proceeds amongst legal heir.
Inform the BM, Manager-CRM too with a copy to Chairman (obtain acknowledgment under seal, sign and diary number ) and include that original documents are not lost are with legal heir and duplicate policy docs issued should be cancelled……………….and claim of payment lodged based on duplicate documents may not be processed.
------------The following info is placed on web site of all life insurance companies as per directives of IRDA.
What is a Death Claim?
When the life assured dies during the Term of the policy i.e. before date of maturity, proceeds under the policy as a claim, is payable to the beneficiary which is called as Death claim.
The person entitled to the proceeds must complete certain forms giving due proof of the death and establishing the claimant's right to such proceeds. When filed with the company, the company is said to have received a death claim.
Who is entitled to receive the Death Claim benefit?
The claim monies can be paid to any of the following:
· Assignee, incase policy has been assigned or
· Nominee or
· Legal Heirs, incase of open title case or rival claimant case
Appointee, incase the nominee is a minor
A Succession Certificate is issued on application by a competent court on the question of the right to the property of the deceased. The Succession Certificate should specifically provide for disbursement of policy monies.
------------ The court has opined that the legal of the life insured who staked their claim with LIC are eligible to get the expenses incurred by them on court case from LIC, and LIC should pay.
The court has elaborated on the Act{s}, right of legal heir over nominee and the judgments and acts are self explanatory.
---D. Mohanavelu Mudaliar And Anr. vs Indian Insurance And Banking ... on 16 July, 1956
Madras High Court
“24. In addition to assignments and creation of trusts, in England also it is common in the case of insurances on the assured's own life, for the assured to nominate a beneficiary at the time of taking out a policy. Such a nomination does not, however, by itself, constitute the assured a trustee, nor, since the person nominated is a stranger to the contract, has he any remedy at law. The property in such a policy will therefore pass, not-withstanding the nomination, to the personal representatives of the assured on his death and the nominee has no rights whatsoever, unless:”
--- Andhra High Court
Life Insurance Corporation Of ... vs Nirmala Adi Reddy And Ors
“The question is whether the L.I.C. of India is justified in law in holding the view that in the absence of a contrary direction from Court, it can pay only to a nominee under the policy ignoring the legal heirs of the deceased policy-holders.”
“The Supreme Court accepted the appeal of the minor son and the mother and declared that each of the plaintiffs is entitled to 1/3rd share of the amount payable under the insurance policies in question and also the interest that might have been earned by its investment and decreed the suit accordingly. Thereby, the Supreme Court held that the nomination made by the assured under S.39 of the Insurance Act does not vest the beneficial interest in the nominee and the nomination is subject to the law of succession. The Supreme Court ruled that the insurance policy forms part of the estate of the deceased which is governed by the law of succession applicable to the assured and devolves according to that law on the legal heirs unless validly excluded by a testament.”
“The Supreme Court ruled that S.39 of the Insurance Act cannot be construed as providing for a third mode of succession in addition to the two modes of testamentary and intestate succession. The Supreme Court accorded to the nomination made under S.39 of the Insurance Act only the legal effect of indicating "the hand which is authorised to receive the amount on the payment of which the insurer gets a valid discharge of its liability under the policy." But the Supreme Court categorically held that "the amount however, can be claimed by the heirs of the assured in accordance with the law of succession governing them".
“These observations would clearly show that the rights of the heirs under the general law to succeed to the estate of the assured were in no way capable of being stalled or stopped by the nomination made under S.39 of the Insurance Act and that the nomination would only help the insurer to earn valid discharge when he pays the amounts due to the nominee before the amounts were claimed by the heir or heirs. In other words, the judgment of the Supreme Court is an authority for the proposition that a succession cannot be stopped or stalled by the nomination made under S.39 of the Insurance Act and that the insurance company cannot act contrary to the lawful claims made by the heirs of the deceased assured.”
“It is not a case where the L.I.C. of India had disclaimed knowledge of the status of the first plaintiff and her children as the heirs of the assured. It is really a case of misconception regarding the scope of nomination and its legal significance. Having driven the plaintiffs to seek the shelter of the Court, the L.I.C. of India cannot refuse to bear the costs of the litigation.”
---------- The Supreme Court of India(SC) in Sarabati Devi Vs Usha Devi (AIR 1984 SC 346) after reviewing many authorities on the subject, held in the context of Section 39 of the Insurance Act, the nomination only indicated the hand which is authorised to receive the amount. The insurer is discharged of his liability under the policy on making payment to the nominee. This does not however preclude other legal heirs to claim the insured amount in accordance with the India Succession Act.
SC has further held that the language of Section 39 is not capable of altering the course of succession under law. If a statute has provided for a nomination expressly overriding the Succession laws, only then the nominee would acquire the rights of a person who nominates and such nomination would not be subject to the claims of legal heirs under the Succession laws.
