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Differentiation Between Assignment And Nomination In Life Insurance

Updated On Sep 13, 2021

In Life Insurance, nomination can be understood as a facility, which allows the policyholder or say insured to nominate a person, who can claim the policy amount, in the event of death of the policyholder. If, in case, a minor is appointed as nominee, then a major should be specified, in order to receive the money secured by the policy, upon the demise of the insured. The policyholder can make a nomination either at the time of purchasing the policy, or anytime before the expiry of the term. The policyholder is allowed to change the nomination, during the term of the policy, by making a fresh nomination, which should be incorporated, either through text in the policy or through an endorsement to the policy, to become effective.

Assignment, as the name suggests, is the legal transfer of rights from the policyholder to the assignee to receive benefits indicated in the insurance agreement. It is usually made out of love and affection with the family members or for adequate consideration to any outside party. The assignment can be made either through an endorsement upon the policy or separate instrument, duly signed by the assignor or his agent. The signature is required to be witnessed by at least one person competent to contract. It becomes effective from the date when the documents are received by the insurance company in proper order. In general, space for endorsement is given in the policy document to enable the holder to affix the assignment statement, along with reasons for the same.

Key Differences Between Nomination and Assignment

The difference between nomination and assignment can be drawn clearly on the following grounds:

  • The appointment of an individual by the assured to receive the amount secured by the policy, upon the demise of the assured is known as a nomination. On the other hand, assignment refers to cede the right, ownership, and interest in the policy to another person.
  • In the nomination, there is no requirement of attestation by the witness. Conversely, attestation by at least one witness is required in case of assignment.
  • In the nomination, there is no such thing like consideration. In contrast, the assignment can be with or without consideration.
  • Nomination does not entitle the nominee the right to sue under the policy. On the contrary, assignment entitles the assignee the right to sue under the policy.
  • The nomination is made to help the beneficiary recover the policy amount when it becomes due for payment. As against this, assignment aims at transferring all rights and interest in favor of the assignee.
  • Nomination can be revoked or changed several times, whereas assignment can be canceled only one or two times during the policy term.
  • The nomination is made in favor of immediate relatives. As opposed, assignment is made in favor of immediate relatives or to an external party.


By and large, a nomination only accentuates the hands, to whom the policy amount is to be paid on the death of the insured, so that the insurance company gets the valid discharge of liabilities, as per the policy. The assignment is generally made by the policyholder out of love for the immediate relatives or even for certain consideration from an external party.

Also read: All You Need to Know About Term Life Insurance

Common Terminologies Of A Life Insurance Policy

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.        

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