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assignment of life policy per section 38, insurance act 1938

Can some one  or expert in Insurance law provide insight on the following points:

1. Does the new assignee get the death benefit if the original assignor dies during the life of the policy and after the assignment is considered effective by the insurer?

2. Will the new assignee also acrrue the same tax benefit / treatment as the original assignor?

3. What is the denomination of the stamp paper for the "Deed of Assignment"?

4. Can the assignment be over rulled if the assignor has willed / gifted his policy to some other party after the successful assignment?



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.

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Thanks for your kind input Kumar. I still have few queries left unasnwered. Glad if you can shed light on the same.

1. If I have to assign the policy to my legal heir (who may not be a nominee) then which is preferred (i.e. legally watertight) route (a) assignment to the legal heir or (b) bequeating my policy to the legal heir via deed of will?

2. If I am assigning the policy to a 3rd pat who is not connected to me, then do I (or the assignor) need to show the proof of the cash consideration recd from the assignee or will a statement stating the same signed by assignee, assignor and a witness will suffice?

3.  I am aware that assignment does apply on the policy governed by the Marriage Women Protection Act 1884 and on the pension policy. Assuming that policy under consideration is outside this contsraint, what other circumstances per your reply can result into cancellation of the assignment?

4. Who get the precedence in claming the benefit of the policy  (a) an assignee who holds perfectly valid assigned policy as per the records of the Insurer or (b) a blood relationship who claims to be the rightful heir and has a will signed by the original policy holder who may have willed the policy despite having it assigned earlier?


Any help on my queries above would be deeply appreciated


You may check the following:

Assignment of the policy shall override and cancell  nomination.

Assignment is better than noimination since nomination can be contested.

If not cancelled the payments shall be made to assignee.

One can mention his decisions in will/will also.

Incase of anyone outside direct blood relatioship financial pronote shall be required to be enclosed for assignment and company shall take a final call on reason and purpose of assignment and shall accept or decline the assignment.Company can accept pronote on paper also. Underwriter reserves the right to demand docs as deemed fit.In case of high risk e.g. High sum assured....

Once the financial consideration/loan is paid the assignor can cancell the assignment ( should obtain acknowledgment and acceptance) and cancellation of financial pronote should be supplied.

MWPA is another option and has its own benefits and is governed by set rules.

 Company shall pay the assigee as per records once he/she stakes the claim.

In case of dispute lodged by any one company may ask to obtain decree.


can anyone advice me on topic of assignment of policy

my case is as follow:-

my elder brother has sanctioned education loan about of 4,00,000 but unfortunatly he passed away in his final year of graduation now this year is time for repayment of his loan  but at the time of taking loan bank enrolled him for a policy. according to policy assignee of policy is bank itself but my concern is about that even my elder brother didn't know about such policy  bank took policy by itself without consulting him and declared as assignee itself and paid premium from his loan amount

i'm damn sure if bank told them about any policy he definatetly declared nominee as father but bank did all job for taking policy  even bank didn't give him policy bond paper and till now bank has original bond paper

we want to know that is it posssible that we can get amount of policy as this amount is much higher than their loan amount

if this is possible than please tell me that what should i have to do so that asignne name can changed from bank to my father's name  or father can be declare as nominee

we are ready to repay whole loan amount to bank with their interest at time when bank need it




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