LIC Policy Nomination vs Assignment - Key Differences Explained

Nomination and assignment are two completely different concepts in an LIC policy - and confusing them can cost your family the claim.

**Nomination:** - You nominate a person to receive policy proceeds after your death - Nominee has no rights while you are alive - You can change the nominee anytime - Multiple nominees allowed with percentage shares - Protected under IRDAI - after Section 38 amendment, spouse/children are beneficial nominees (cannot be contested by creditors)

**Assignment:** - You transfer policy ownership to another person or institution - Assignee has full rights over the policy even while you are alive - Two types: - **Absolute assignment:** Complete, irrevocable transfer (used for collateral - bank loans against policy) - **Conditional assignment:** Transfer with conditions (e.g., reverts back if you survive loan)

**When assignment is used:** 1. Home loan: Bank becomes assignee until loan is repaid 2. Gifting the policy to a child or spouse 3. Business arrangements

**Important caution:** If you assign your policy to a bank for a loan, the bank is the beneficiary - NOT your nominee. Your family cannot claim the policy until the bank assignment is released.

**Practical advice:** - Always update nomination after marriage, divorce, or death of nominee - If policy is assigned to bank, get release of assignment certificate when loan is closed - Keep nominee informed about the policy

Call 9415313434 to update nomination on your existing policies.