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:
- ▸Home loan: Bank becomes assignee until loan is repaid
- ▸Gifting the policy to a child or spouse
- ▸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.
