Appoint beneficial nominees for absolute rights over proceeds

If nominees pass away, distribution is governed by succession laws of insured's religion

- SANJAY KUMAR SINGH & KARTHIK JEROME

Accidents can sometimes result in the tragic loss of an entire family, including the life insurance policyholder, the nominee (typically the spouse), and even the children. In such emotionally and legally complex scenarios, how are insurance payouts made? Life insurance and legal experts explain the process.

When policyholder and nominee pass away If the policyholder and the nominee (spouse) pass away in the same accident, the insurance payout does not lapse. "In such cases, the benefit is directed to the legal heirs of the life assured," says Sanjay Arora, chief of operations, Tata AIA Life Insurance.

Section 39(5) of the Insurance Act, 1938, applies. "Legal heirs must act through the executor if a will exists, or letters of administration or succession certificate if there is no will," says Shabnam Shaikh, partner, Khaitan & Co.

The legal heir of the nominee, proposer, or life assured will have to submit any one of the following additional mandatory documents.

"These could be the nominee's death certificate and succession certificate; will of the life assured or the nominee; or notarised indemnity with affidavit of ₹600 (other than Maharashtra)," says Amish Banker, chief operations officer, ICICI Prudential Life Insurance.

For Maharashtra, affidavit of ₹1,000, a family tree certificate or legal heirship certificate from the current claimant, along with no-objection certificate from the remaining legal heirs is required.