Assignment of a life insurance policy-1

‘Assignment’ is a transfer of property. The policyholder transfers his property in the policy to some one else through assignment. When you write on your policy bond that “I have assigned this policy to X for valuable consideration / natural love and affection” and signs it and get it witnessed, the assignment is complete in all respects. The policy now belongs to X, if the assignment is absolute. I shall deal with assignment in some detail in my next Posts.

The effects of assignment by writing on the policy are:

1. Though it is a transfer of property, it is exempted from Stamp Duty
2. It need not be registered with the Sub Registry
3. It cancels nomination
4. Absolute assignee becomes policyholder
5. Policy holder gets all benefits and he shall pay future premiums
6. If life assured dies, claim is paid to absolute assignee
7. If absolute assignee dies, there is no claim, policy continues

                                              

Please read the following sub-sections of Sec.38 of the Insurance Act, 1938.

38 (1): A transfer or assignment of a policy of life insurance, whether with or without consideration may be made only by an endorsement upon the policy itself or by a separate instrument, signed in either case by the transferor or by the assignor, his duly authorized agent and attested by at least one witness, specifically setting forth the fact of transfer or assignment.

38 (2): The transfer or assignment shall be complete and effectual upon the execution of such endorsement or instrument duly attested but [except where the transfer or assignment is in favour of the insurer] shall not be operative as against an insurer and shall not confer upon the transferee or assignee, or his legal representative, any right to sue for the amount of such policy or the moneys secured thereby until a notice in writing of the transfer or assignment   and either the said endorsement or instrument  itself or a copy thereof  certified to be correct by both transferor and transferee or by their duly authorized agent have been delivered to the insurer, provided that where the insurer maintains one or more places of business in India, such notice shall be delivered only at thee place in India mentioned in the policy  for the purpose or at his principal place of business in India.

Key words:

Assignment

Nomination

Endorsement

Stamp duty