Podcast
Questions and Answers
What happens to the nomination if a policy is assigned to another party?
What happens to the nomination if a policy is assigned to another party?
- The nominee retains rights even after assignment.
- The assignment and nomination must be submitted simultaneously.
- The nomination automatically gets cancelled. (correct)
- The nomination remains valid unless revoked.
Who can benefit from the death claim in the event of the life assured's death?
Who can benefit from the death claim in the event of the life assured's death?
- Only the legal heirs of the policyholder.
- The nominee only.
- The nominee holds the benefits on behalf of the legal heirs. (correct)
- The policyholder has the sole right to claim the death benefit.
If a nominee dies before the life assured, who receives the death claim?
If a nominee dies before the life assured, who receives the death claim?
- The estate of the deceased nominee.
- The legal representatives of the deceased nominee.
- The other nominees alive as of the date of death. (correct)
- The insurer retains the death claim.
What happens to the nomination if the policyholder revokes it?
What happens to the nomination if the policyholder revokes it?
When can a nominee influence the insurance policy?
When can a nominee influence the insurance policy?
Which of the following statements is true regarding loans against insurance policies?
Which of the following statements is true regarding loans against insurance policies?
What determines the legal heirs of the life assured?
What determines the legal heirs of the life assured?
In the case of maturity amounts payable in installments, what happens if the life assured passes away?
In the case of maturity amounts payable in installments, what happens if the life assured passes away?
What is the Surrender Value of an insurance policy?
What is the Surrender Value of an insurance policy?
How can a policyholder utilize an insurance policy for financial assistance?
How can a policyholder utilize an insurance policy for financial assistance?
What is the primary difference between policy assignment and nomination?
What is the primary difference between policy assignment and nomination?
Which factor impacts the interest rates on loans taken against insurance policies?
Which factor impacts the interest rates on loans taken against insurance policies?
What is an adverse selection in the context of insurance?
What is an adverse selection in the context of insurance?
What is a common reason for policyholders to surrender their insurance policies?
What is a common reason for policyholders to surrender their insurance policies?
Which characteristic makes a policy eligible for a loan against it?
Which characteristic makes a policy eligible for a loan against it?
What could happen if a policyholder fails to repay a loan taken against an insurance policy?
What could happen if a policyholder fails to repay a loan taken against an insurance policy?
What is the term used for the amount payable to a policyholder when they withdraw their life insurance policy before maturity?
What is the term used for the amount payable to a policyholder when they withdraw their life insurance policy before maturity?
What can affect the surrender value of a life insurance policy in a financial emergency?
What can affect the surrender value of a life insurance policy in a financial emergency?
In the context of policy assignment and nomination, what happens if the nominee dies after the life assured but before the death claim payment?
In the context of policy assignment and nomination, what happens if the nominee dies after the life assured but before the death claim payment?
Which statement about the rights of nominees is correct?
Which statement about the rights of nominees is correct?
What is a common misconception regarding creditors and insurance policies?
What is a common misconception regarding creditors and insurance policies?
What is typically required if the nominee of a life insurance policy is a minor?
What is typically required if the nominee of a life insurance policy is a minor?
What is a distinct advantage of having the surrender feature in an insurance policy?
What is a distinct advantage of having the surrender feature in an insurance policy?
Which factor is least likely to influence the interest rates on loans against insurance policies?
Which factor is least likely to influence the interest rates on loans against insurance policies?
Study Notes
Nomination in Insurance Policies
- A notice for nomination must be served to the insurer by the policyholder or the life assured if they are different individuals.
- Section 39 of the Insurance Act 1938 governs the nomination of policies.
- Policyholders can revoke or cancel nominations anytime during the policy term for policies on their own life.
- If the policyholder and insured are different, nominees cannot be appointed by the policyholder.
- Nominees cannot influence policy terms; their benefits arise only upon the life assured's death during the policy term.
- Multiple nominees can be appointed; surviving nominees receive benefits if one dies before the life assured.
- Nominees act on behalf of the legal heirs, holding benefits until heirs are determined by relationship to the life assured.
- If a will is present, those named in it become entitled to the death claim.
- If a nominee dies after the policyholder but before the claim is settled, benefits go to the life assured's legal representatives.
- Installments of maturity amounts are paid to nominees in case of policies with installment features.
- Assignment of a policy automatically cancels any existing nomination, except assignments made as security for loans.
Assignment of Insurance Policies
- Assignment involves transferring title and rights of assets from one person to another.
- A scenario illustrates how a person can use an insurance policy as collateral for a loan without affecting other key assets.
- Creditors may attach a nominated policy unless assignment fraudulently defrauds them.
Surrender of Insurance Policies
- Surrendering an insurance policy allows for withdrawal before maturity, known as 'surrender of policy.'
- Surrender value or cash value is the amount payable upon surrender, providing liquidity to policyholders during emergencies.
- Insurance companies specify surrender values for various years of the policy term to inform policyholders.
- This feature addresses liquidity, enabling policyholders to withdraw benefits if necessary, subject to specific conditions.
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Description
This quiz covers the essential aspects of nomination in insurance policies as per Section 39 of the Insurance Act 1938. Understand the rights of policyholders and nominees, as well as the implications of revoking nominations and how benefits are distributed. Test your knowledge on the complex relationships between policyholders, nominees, and legal heirs.
