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Sushant Haware   21 June 2024

Misselling from insurance company or ignorance from my end?

I purchased term insurance from HDFC Life in 2019 and recently I came to know about Married Women's Property Act, 1874. From what I can understand from policy terms and conditions is that this can be opted only during the time of policy purchase. I clearly remember having no discussion about this specific option from sales person. All I can remember about how sales person talking about other rider benefits etc.
Is it not sales person / Insurance company responsibility to inform their customer about this option when it costs nothing to both the parties? Why spend so much of time discussing only about the additional riders? Is there a foul play here?

Can I endorse my existing policy under MWP Act after it has been issued? What are my options?
The reason I am asking is because I cannot fathom the idea of any creditor having 1st claim on the policy when ideally it should be my family. All because this was not informed to me at the time of policy purchase.

Here are the terms and conditions that lead to my question and perceived conclusion -
Section 39 - Nomination by policyholder
Nomination of a life insurance Policy is as below in accordance with Section 39 of the Insurance Act, 1938 as amended by Insurance Laws (Amendment) Act, 2015 dated
23.03.2015. The extant provisions in this regard are as follows:
(1) The policyholder of a life insurance on his own life may nominate a person or persons to whom money secured by the policy shall be paid in the event of his death.
(2) Where the nominee is a minor, the policyholder may appoint any person to receive the money secured by the policy in the event of policyholder’s death during the minority of the nominee. The manner of appointment to be laid down by the insurer.
(3) Nomination can be made at any time before the maturity of the policy.
(4) Nomination may be incorporated in the text of the policy itself or may be endorsed on the policy communicated to the insurer and can be registered by the insurer in the records relating to the policy.
(5) Nomination can be cancelled or changed at any time before policy matures, by an endorsement or a further endorsement or a will as the case may be.
(6) A notice in writing of Change or Cancellation of nomination must be delivered to the insurer for the insurer to be liable to such nominee. Otherwise, insurer will not be liable if a bonafide payment is made to the person named in the text of the policy or in the registered records of the insurer.
(7) Fee to be paid to the insurer for registering change or cancellation of a nomination can be specified by the Authority through Regulations.
(8) On receipt of notice with fee, the insurer should grant a written acknowledgement to the policyholder of having registered a nomination or cancellation or change thereof.
(9) A transfer or assignment made in accordance with Section 38 shall automatically cancel the nomination except in case of assignment to the insurer or other transferee or assignee for purpose of loan or against security or its reassignment after repayment. In such case, the nomination will not get cancelled to the extent of insurer’s or transferee’s or assignee’s interest in the policy. The nomination will get revived on repayment of the loan.
(10) The right of any creditor to be paid out of the proceeds of any policy of life insurance shall not be affected by the nomination.
(11) In case of nomination by policyholder whose life is insured, if the nominees die before the policyholder, the proceeds are payable to policyholder or his heirs or legal representatives or holder of succession certificate.
(12) In case nominee(s) survive the person whose life is insured, the amount secured by the policy shall be paid to such survivor(s).
(13) Where the policyholder whose life is insured nominates his a. parents or b. spouse or c. children or d. spouse and children e. or any of them the nominees are beneficially entitled to the amount payable by the insurer to the policyholder unless it is proved that policyholder could not have conferred such beneficial title on the nominee having regard to the nature of his title.
(14) If nominee(s) die after the policyholder but before his share of the amount secured under the policy is paid, the share of the expired nominee(s) shall be payable to the heirs or legal representative of the nominee or holder of succession certificate of such nominee(s).
(15) The provisions of sub-section 7 and 8 (13 and 14 above) shall apply to all life insurance policies maturing for payment after the commencement of Insurance Laws (Amendment) Act, 2015 (i.e 23.03.2015 ).
(16) If policyholder dies after maturity but the proceeds and benefit of the policy has not been paid to him because of his death, his nominee(s) shall be entitled to the proceeds and benefit of the policy.
(17) The provisions of Section 39 are not applicable to any life insurance policy to which Section 6 of Married Women’s Property Act, 1874 applies or has at any time applied except where before or after Insurance Laws (Amendment) Act, 2015, a nomination is made in favour of spouse or children or spouse and children whether or not on the face of the policy it is mentioned that it is made under Section 39. Where nomination is intended to be made to spouse or children or spouse and children under Section 6 of MWP Act, it should be specifically mentioned on the policy. In such a case only, the provisions of Section 39 will not apply.


 4 Replies

T. Kalaiselvan, Advocate (Advocate)     21 June 2024

The government's role in aided schools is limited to recognition, approval, and providing aid - it does not make these schools statutory bodies that would entitle their employees to be considered government employees 

If there was no endorsement to this effect at the time of purchasig this life insurance  policy then it may not be allowed to added at a later stage, therefore the section 39 of the act will prevail.

Sushant Haware   22 June 2024

Sir, When you say endorsement who should have been endorsing it in the first place? Customer or Entity selling the insurance?

T. Kalaiselvan, Advocate (Advocate)     23 June 2024

It is the problem of the buyer of insurance policy. 

Hence buyer should have been cautious about such issues while purchasing the insurance policy. 

This is a requirement for the buyer and not the duty of the insurance company to notify buyer about it. 

Therefore the responsibility is on the buyer to have it endorsed then and he cannot fill up the lacuna later on neither he can blame others for the lapse on his side 

P. Venu (Advocate)     28 June 2024

In spite of repeated efforts, I am unable fathom the issue, if at all any as to nomination and the application of MWP Act.

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