Assignment of a life insurance policy -2

We have seen in the last Post that an assignment is complete and effectual upon the execution of the endorsement / instrument by signature of the assignor and attestation of it by witness.

Insurer is unaware of this. If the assignor applies for a duplicate policy the insurer will issue it. If a claim is due on the policy the insurer will pay it to the assignor. The assignor can continue many transactions on the policy without the knowledge of the assignee. To avoid such situations a notice shall be given to the insurer. That makes the insurer to take cognizance of the assignment. We now read sub-section (3) & (4) of Section 38.

Sec.38 (3): The date on which the notice referred to in sub-section (2) is delivered to the insurer shall regulate the priority of all claims under a transfer or assignment as between persons interested in the policy; and where there is more than one instrument of transfer or assignment the priority of the claims under such instruments shall be governed by the order in which the notices referred to in sub-section (2) are delivered.

Sec.38 (4): Upon receipt of the notice referred to in sub-section (2), the insurer shall record the fact of such transfer or assignment together with the date thereof  and the name of the transferee or the assignee and shall, on the request of the person by whom the notice was given, or of the transferee or assignee, on payment of a fee not exceeding one rupee, grant a written acknowledgement of the receipt of such notice;  and any such acknowledgement shall be conclusive evidence against the insurer that he has duly received the notice to which such acknowledgement relates.  

Key words:

Instrument of transfer

Assignment

Assignor

Assignee

Endorsement