Legal heirs vs nominees
Aditya Dev
(Querist) 18 January 2017
This query is : Resolved
I AM A MARRIED MAN WHO HAS AN ACCIDENTAL INSURANCE POLICY. MY ONLY NOMINEE IS MY FATHER. NOW AFTER MY DEATH IN AN ACCIDENT, MY WIFE GOES TOT HE BANK AND SAYS THAT SHE IS MY LEGAL HEIR AND IT IS HER RIGHT TO GET THE MONEY OF THE INSURANCE.
MY QUESTION IS THAT PROVISO OF SUBSECTION 1 OF SECTION 39 OF THE INSURANCE ACT MAKES A CLEAR DISTINCTION BETWEEN 'MONEY RECEIVED' AND 'MONEY PAID. ALSO SUBSECTION 7 OF SECTION 39 ALSO SAYS THAT THE "NOMINEE SHALL BE BENEFICIALLY ENTITLED TO THE AMOUNT PAYABLE"
THEN CAN MY WIFE CLAIM THE MONEY OR WILL MY FATHER BE THE ULTIMATE OWNER OF THE PROPERTY??
PLEASE ANSWER ASAP AND DO READ THE RELEVANT SECTION.
Kumar Doab
(Expert) 18 January 2017
You have posted that;
"NOW AFTER MY DEATH IN AN ACCIDENT, MY WIFE GOES TOT HE BANK'
You are alive.
Probably you are assuming the situation and hence the query.
Isn't it?
Kumar Doab
(Expert) 18 January 2017
The insurer/bank can discharge its responsibility by making the payment to the 'Nominee'.
Explore the possibility of 'Assignment', WILL in favor of the person whom you want to benefit with Sum Assured in policy,after your death, in case you do not survive during term of the policy.
Inform the bank/insurer accordingly under proper acknowledgment.
Aditya Dev
(Querist) 18 January 2017
i have not made any will. and yes this is just an hypothetical situation.
what i want to know is who will be ultimate owner of the money. My father or my wife or will my father have to give some portion to my wife..
Rajendra K Goyal
(Expert) 18 January 2017
Academic query.
Looks like examination question / moot court problem / hypothetical query.
Aditya Dev
(Querist) 18 January 2017
no not an academic query. Facts r true
Kumar Doab
(Expert) 18 January 2017
Assignment prevails upon Nomination.
Assignment to Father can be out of love and affection.
WILL is another option.
If there is just Nomination then The insurer/bank can discharge its responsibility by making the payment to the 'Nominee'.
Kumar Doab
(Expert) 18 January 2017
It is believed that you are Hindu.
Confirm!
Nominee is mere trustee and is under obligation to pass on to Legal Heirs/successors.
ClassI legal heirs have first right i.e; Mother, wife,sons and daughters and shall share equally.
If ClassI legal heirs are not present ClassII legal heirs shall come into picture.
Father is in ClassII.
Guest
(Expert) 18 January 2017
Dear Aditya Dev,
Your statement, "not an academic query. Facts r true" does not seem to be correct. Only one of the two facts can be true, i.e., either you are alive and your statement, " NOW AFTER MY DEATH IN AN ACCIDENT, MY WIFE GOES TO THE BANK" can be false, or you are dead, as per your statement and that falsifies your reply. Anyway, language has no issue.
But, the contents of your statement, "SUBSECTION 7 OF SECTION 39 ALSO SAYS THAT THE 'NOMINEE SHALL BE BENEFICIALLY ENTITLED TO THE AMOUNT PAYABLE" do not seem to match fully with the provisions of Sub-section 7 of Sec.39.
Can you please clarify up to which date, your copy of the Act is amended and by which of the Amendment Act the said sub-section, if complete, has been amended in which year?
Rest depends upon your response to my question.
Kumar Doab
(Expert) 18 January 2017
You may go thru:
The Insurance Act 1938;
Sec;39(2) (4)
The Insurance Law (Amendment) Ordinance 2014
Sec;39(2) (4) (7) (11)
at IRDA website.
https://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo107&flag=1
file:///C:/Users/Login/Downloads/Ins%20Laws%20Amendment%20Ordinance%20(1)%20(1).pdf
Further you may discuss with your own counsel at your own location.
Aditya Dev
(Querist) 18 January 2017
Clarifications
"not an academic query. Facts r true" - means that this is a real ongoing case and not just some hypothetical question.
"NOW AFTER MY DEATH IN AN ACCIDENT, MY WIFE GOES TO THE BANK" - this is an assumption that i have dies and the dispute arises after my death
and this the act that i am referring to - go to page 20 for section 39
http://www.indiacode.nic.in/acts-in-pdf/2015/201505.pdf
and there is no will or assignment. My question is simple ' DOES THE NOMINATION IN THIS CASE OF MY FATHER ENTITLE HIM TO BE THE ULTIMATE OWNER OR JUST THE PERSON ENTITLED TO RECEIVE THE AMOUNT WHICH LATER HE WILL HAVE TO PART WITH AS PER THE LAW OF SUCCESSION
HOPE THIS CLARIFIES
Kumar Doab
(Expert) 18 January 2017
The narration at the link mentioned by you and the links at IRDA website all mention about WILL, assignment,nomination, etc
Aditya Dev
(Querist) 18 January 2017
the link is a pdf of the insurance act 2015 amendment act.
This is a representation of the relevant section
(1) The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person orpersons to whom the money secured by the policy shall be paid in the event of his
death:
Provided that, where any nominee is a minor, it shall be lawful for the policyholder
to appoint any person in the manner laid down by the insurer, to receive the money
secured by the policy in the event of his death during the minority of the nominee.
(7) Subject to the other provisions of this section, where the holder of a policy of insurance on his own life nominates his parents, or his spouse, or his children, or his spouse and children, or any of them, the nominee or nominees shall be beneficially
entitled to the amount payable by the insurer to him or them under sub-section (6) unless it is proved that the holder of the policy, having regard to the nature of his title to the policy, could not have conferred any such beneficial title on the nominee.
Aditya Dev
(Querist) 18 January 2017
Mr. Dhingra
the section that i want you to read is section 39 of the insurance act. titled "Nomination by Policyholder"
and my question does not deal with assignment. I only want to know who will the owner of the money.
Guest
(Expert) 18 January 2017
Dear Aditya Dev,
I do understand well that your question related to only nomination, not on assignment. But, I don't know, on what context you have pointed out to me about assignment, as you replied addressing me, like, "my question does not deal with assignment. I only want to know who will the owner of the money."
Clearly advice about assignment was given by Mr. Kumar Doab. As usual, as of his habit, he does not refrain from crating confusions in the minds of the querists by twisting the issues to some wrong track. Even he referred sub-section (4) of section 39, which makes mention of assignment and that too from the short-lived Ordinance No.8 of 2014, which lapsed in March 2015, about two years back, and is not valid to be referred in the year of 2017. it seems he is not aware that the validity of an Ordinance lapses on enactment or at the most 6 months of its issue, whichever is earlier.
CONTRARILY, I simply pointed out that your version of the part of the section (sub-section (7) was not complete (as mentioned, do not seem to match fully).
Anyway, the provision of sub-section (7) is completed by the part of the sentence, "unless it is proved that the holder of the policy, having regard to the nature of his title to the policy, could not have conferred any such beneficial title on the nominee," which you have already stated in your previous post in clarification.
SO, AS PER MY OPINION IS CONCERNED, the section is quite clear stating as "beneficially entitled". That clearly means that your wife would not be able to claim any amount on account of insurance proceeds from your father.
PLEASE NOTE, THERE IS A MARKED DIFFERENCE BETWEEN THE TERM "PAID" AND "BENEFICIALLY ENTITLED." Nominee in any other case may or may not be treated as a trustee of the proceeds, but the Insurance Act makes a nominee entitled to receive that too beneficially, i.e., to get benefit out of the proceeds.
Guest
(Expert) 18 January 2017
Dear Aditya Dev,
So far as the advice of Mr. Kumar Doab about assignment of the policy is concerned that is quite wrong, as you would not be left any option to change its entitlement any time later. That harmful to your own interest, if the assigned policy is not released by the assignee on your requirement to claim on maturity or you feel to make the entitlement changed.
Contrarily, a nomination is always subject to change at the discretion of the policy holder.
Aditya Dev
(Querist) 18 January 2017
Mr Dhingra
i am very thankful to you for your opinion which i also share. In my opinion also the only the father should receive the money and should be the ultimate owner.
But i have found 3 Supreme Court judgments, 2 of which are decided in 2015 and 2016 and both say that nominee is the person who is supposed to receive the money and will have to divide the money as per the laws of succession. If he does not do so then legal heirs can go to court.The only exception to this rule is in the companies act where the nominee will get the amount if there is no will made by the deceased.
What i don't understand is this."When they have made a clear distinction between money paid and received in clause one then why not make it so for subsection 7 and 8.
I thank you very much sir for your opinion.
Guest
(Expert) 19 January 2017
Dear Aditya Dev,
Thanks for the appreciation.
About your reference to the SC cases, if the petitions pertained prior to the date of 26.12.2014, the decisions cannot be made effective on the cases arising after amendment of the section 39(7), i.e., beyond 26th day of December, 2014, being the effective date of the amendment act 2015. Prior to that date there was no such provision of beneficial entitlement in the existing Insurance Act. The earlier provision of the non-amended Act contained only for payment, not beneficial entitlement.
Guest
(Expert) 19 January 2017
Dear Aditya Dev,
Thanks for your PM. That has been replied. Hope you are now fully satisfied with that reply with specific reference to the referred case law.
