Assignment of a life insurance policy – 3

See the following effects of assignment:

1. Assignee becomes the only person entitled to benefits under the policy
2. Assignee’s rights are subject to all liabilities and equities to which the assignor was subject
3. Assignee may institute any proceedings in relation to the policy without making assignor a party thereto
4. Conditional assignment is valid notwithstanding any law or custom having the force of law to the contrary.

Let us go through the relevant provisions of law. Section 38 (5), (6) and (7) are reproduced below:

Sec.38 (5): Subject to the terms and conditions of the transfer or assignment, the insurer shall, from the date of receipt of the notice referred to in sub-section (2),  recognize the transferee or assignee named in the notice as the only person entitled to benefit under the policy, and such person shall subject to all liabilities and equities to which the transferor or assignor was subject at the date of the transfer or assignment and may institute any proceedings in relation to the policy without obtaining the consent of the transferor or assignor or making him a party to such proceedings.

38 (6): Any rights and remedies of an assignee or transferee of a policy of life insurance under an assignment or transfer effected prior to the commencement of this Act shall not be affected by provisions of this section.

38 (7): Notwithstanding any law or custom having the force of law to the contrary, an assignment in favour of a person made with the condition that it shall be inoperative or that the interest shall pass to some other person on the happening of a specified event during the life time of the person whose life is insured, and any assignment in favour of the survivor or survivors of a number of persons shall be valid.

Key words:

Assignment

Assignor

Assignee

Conditional assignment.