It is very important to appoint nominations for all financial accounts such as bank accounts, FD, mutual funds, stock, insurance etc. When an account holder or policyholder dies, the amount deposited in his account is given to the nominated person made by him. The Karnataka High Court has given a major verdict in a case related to the individuals nominated in insurance policies. The Karnataka High Court has said that if the legal heirs of the policyholder claim, then the nominated person appointed under the insurance policy will not have full authority over insurance benefits.
The nominee provision of insurance law does not cancel the succession law
The High Court also clarified that Section 39 of the Insurance Act, 1938, which belongs to the nomination provision, does not revoke the individual succession laws such as the Hindu Succession Act, 1956. Justice Anant Ramnath Hegde ruled in Neelv alias Neelama vs Chandrav alias Chandrakala alias Hema and other cases.
The nominee will get all the benefits only when the legal successor does not claim
There was a dispute between these aspects about the appropriate contenders for insurance payment. Justice Hegde said in his judgment that the person named in the insurance policy can get insurance benefits only if his legal heir does not claim it. If a legal successor claims his right, the nominee claim should be subject to the Personal Succession Law.
There was a dispute between mother-in-law about payment of insurance amount
The person involved in this case bought two different insurance policies before his marriage. In both these policies, the person made his mother a name only. The person did not change the details of the nominee even after his marriage and the birth of the child. After the person’s death in 2019, a legal battle began between his mother and wife for payment of insurance amount. The Karnataka High Court upheld the decision of the lower court and ruled that the deceased’s mother, wife and child would get one third of the insurance benefit.
