Life insurance policy can be assigned
-to legal heir e.g spouse/son/daughter
-to direct blood relation e.g brother/sister with explanation e.g due to love and affection.
-to others in case of a financial transaction and should be supported with financial pronote.
The premium is paid by the life insured/proposer and maturity benefit/death benefit is paid to the assignee.
Insurer provides model language acceptable to them for assignment on a stamp paper of Rs.3000/- ,and notice of assignment to be signed by assignor,asignee,witnesses.
Assignment is otherwise better option than nomination since nomination can be contested.
Assignment can be cancelled under valid circumstances.
In case of death the death claim is paid to assignee by the insurer.
The payments attract tax treatment as per the prevailing income tax rules at the time of payment.
before/after the assignment and otherwise also any overriding instructions have to be notified to the insurer and have to be acknowledged and accepted by the insurer as per the prevailing insurance laws.