A nominee is not entitled to the entire insurance amount as per the ruling of the High Court. The decision proved to be an important one, as it held that legal heirs of the deceased also have a right to claim their share. This ruling arose out of an insurance claim between the deceased’s mother and wife.
This situation revolved around a man who had nominated his mother in the insurance policy before getting married, but had never changed the nominee after marriage, and after the birth of his child. The insurance claim concerning the policy came to dispute after his death from 2019 onwards between his mother and his wife. Karnataka High Court has ordered that the nominee (mother) shall not be the full beneficiary. The legal heirs, including the wife and child, would be entitled to a share of the insurance money.
What Did the Court Say?
The Court is of the opinion that Section 39 of the Insurance Act, 1938 does not override other laws like the Hindu Succession Act, 1956. The nominee’s right to the insurance money, as explained by Justice Anant Ramanath Hegde, was conditional upon succession law, and the distribution of the insurance amount had to be done whenever legal heirs (spouse, children, or parents) were making the claim.
This judgment was delivered in the case of Neelavva alias Neelamma vs Chandravva alias Chandrakala alias Hema and others. The court upheld the lower court’s judgment and on behalf of the deceased mother, wife, and child, an equal one-third share was ordered toward the total amount of insurance.
Key Takeaways from the Ruling
- Role of Nominee Explained: The nominee is said to have a multiplicity of functions: to simply interface and transmit the money to beneficiaries.
- Claims of Legal Heirs: A valid claim can be made by spouses, children, and parents.
- Importance of Updating Nominees: Therefore, policyholders need to constantly review and update their nominees whenever changes in family structure occur, such as marriage or birth of a child.
Emotional Impact and Practical Advice
Above all, this ruling emphasizes the need for financial planning and ensuring the safety of your loved ones. It’s an important reminder that an insurance policy should not just be about the nominee but get down to protecting the interest of all legal heirs. A family is emotionally racked during these disputes, and this judgment seeks to bring some clarity and equity into it.
If you have any insurance policies, it will be prudent to go through the documents once. Nominee details in your insurance policy must not be anything less than a mirror reflection of reality concerning your family today. This will go a long way toward avoiding any conflicting scenarios and guaranteeing that your family members are taken care of after your passing.
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