Family member as nominee of deceased policyholder will not merely be custodian

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?

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.

Rishabh Shroff is partner, Cyril Amarchand Mangaldas. Queries and views at mintmoney@livemint.com