A person can transfer his rights, title and interest in a life insurance policy to another by assigning it to him. This is usually done in order to provide security for a loan or secure the financial interest of the other person. After the insurance policy is assigned, the assignee is set to receive the benefits from it.
Assignment form The policyholder has to send the assignment form or application to the insurance company providing details of the policy that has to be assigned and those of the assignee. These include the name, address, contact information, signature of the assignee, his relationship with the policyholder and the reason for assignment.
Documents Along with the form, the policyholder should send the original policy and KYC documents of the assignee. It should be signed by at least one witness, whose name and details should be provided in the form.
Processing Once the documents are submitted to the insurance company, the latter will take 10-15 working days to process the request and make the necessary changes in its records.
Endorsement The assignment can be endorsed on the policy document, or a notarised assignment deed on a stamp paper confirming that it can be executed. The assignment can be revoked at a later date by the policyholder. In such a case, a ‘no-objection certificate’ has to be submitted by the assignee.
Points to note
- Assignment in a policy takes precedence over nomination.
- A nominee will receive the benefits of an insurance policy only on the death of the insured. An assignee will get the ones that are paid out even during the lifetime of the insured.
- Endorsing the assignment on the policy document can save the hassle of getting a stamp paper for executing the assignment deed.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Sunita Abraham, Girija Gadre and Arti Bhargava)
http://economictimes.indiatimes.com/personal-finance/insurance/analysis/how-to-transfer-ones-life-insurance-policy-to-someone-else/articleshow/17899040.cms
