Deceased Policyholder

The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions in an article in the  following Q&A which was published by the Mint Newspaper on 30th January, 2022 and the online edition of the same can be found here.

One of my friend’s relatives took an insurance policy with a public insurer in 2013 and she paid two payments and the third payment was not paid by the insurance agent. Later, she passed away due to health issues. She had only one daughter, who is a minor and nominee too. Can she claim her mother’s insurance, as she got to know about her mother’s insurance policy a week ago?

—Name withheld on request

We have assumed that your friend’s relative has taken a life insurance policy and made a nomination thereunder. The Insurance Laws (Amendment) Act, 2015 states that if a person nominates their immediate family member (i.e. parents, or spouse, or children), such nominees shall also beneficially be entitled to the amount payable by the insurer to the deceased policyholder and shall not merely be custodians. Such nominees would obtain the proceeds of the insurance policies outright.

Therefore, in the present case, since the holder had nominated her minor daughter for her policy, the daughter would be entitled to receive the insurance proceeds beneficially. However, since the daughter is a minor, the monies can be claimed by her guardian on her behalf, i.e. the father or other appointed guardian in his absence.