Assignee and Nominee in Life Insurance Policies

Life insurance policies promise to provide life cover to the life assured and if the life assured passes away the life insurance benefits payable under the policy or the claim benefits are paid out to the Nominee or the Assignee. It is very important to appoint a Nominee or an Assignee who will receive the benefit if the life assured passes away. Nominee or Assignee is appointed by the life assured before the issuance of the life insurance policy.

Who is the Nominee?

The nominee is the person who is appointed by the life assured, the nominee is entitled to receive the sum assured or any type of other benefits in case of an unforeseen demise of the life assured. The life assured is entitled to make a nomination at any time during the policy tenure for payments of benefits under the policy at the time of an unforeseen demise of the life assured. Nomination is made by endorsement of the policy or by giving in writing to the insurance company. Nomination is permitted under section 39 of the Insurance Act, of 1938.

Types of Nominees in Life Insurance

Nominees have 4 different categories as discussed below:

1. Minor Nominees

If the life assured makes his/her child who is younger than 18 years of age, they do not qualify the eligibility to receive the claim benefit and are considered as Minor Nominees.

2. Beneficial Nominees

If the life assured makes any immediate family member such as parents, children or spouse they will be considered as the beneficial owner of the claim benefits of the life insurance policy. They are also known as Beneficial Nominees.

3. Changing Nominees

The life assured can change the nominee whenever he/she wishes to, but it should always be kept in mind that the current nominee will always have an upper hand over the previous one.

Non-Family Nominees: If the life assured wishes to make distant relatives or friends as a nominee in their life insurance policy they are called Non-Family Nominees.

Who is an Assignee?

Assignee is the person who is legally appointed by the life assured, Assignee is entitled to the policy rights if the life assured wants to transfer the policy right to someone else. Assignment simply means legal transfer of the life insurance policy rights from the life assured to the person who is appointed as an Assignee. Assignment of the policy is allowed under section 38 of the Insurance Act, of 1938. Assignment of the policy can be made by an endorsement on the insurance policy.

Types of Assignees in Life Insurance

Assignees have 2 categories as discussed below:

1. Absolute Assignee

If the life assured transfers all the policy rights to the assignee without any terms and conditions then the appointed assignee is known as the absolute assignee.

2. Conditional Assignee

If the life assured transfers all the policy rights to the assignee under certain terms and conditions then the appointed assignee will be known as a conditional assignee. The transfer of the life insurance policy rights will only take place if the terms and conditions are agreed upon.

Difference Between Nominee and Assignee in Life Insurance

Assignment and Nomination in life insurance are both two different things used in one concept, it is necessary to know how both of them are different from one another. Before you appoint a Nominee or an Assignee you should have appropriate knowledge about them.

Conclusion

A nominee and an assignee serve different purposes and before buying a life insurance policy you should know about both of them. This will help you in making an informed decision about selecting a nominee or an assignee

Also Read:

• How Does A Life Insurance Policy Work?
• Importance of Life Insurance 

Disclaimer: This article is issued in the general public interest and is 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.