I have assigned my life insurance policy in favour of the bank. Under the circumstances, what happens to the existing nomination in the policy?
An existing nomination gets automatically cancelled when the policy is assigned
I have assigned my life insurance policy in favour of the bank. Under the circumstances, what happens to the existing nomination in the policy?
Devika Shetty, Mangalore
An existing nomination gets automatically cancelled when the policy is assigned. But, an assignment, made in favour of the insurer, in consideration for a loan granted against the security of the policy, does not cancel the nomination. It does, however, affect the right of the nominee to the extent of the insurer’s interest in respect of the loan advanced. In other words, the nominee will be paid the claim amount remaining after repaying the loan and interest.