As per the terms of agreement of a loan, I have to assign one of my high value policies in favour of a creditor. My wife is a nominee under that policy. What happens to the existing nominations in a policy in case it is assigned?
Rupesh Sinha, Delhi
The existing nominations under a policy get automatically cancelled when it is assigned. But, if the assignment is made in favour of the insurer, for a loan granted against the security of the policy, the nominations don’t get cancelled automatically. However, the right of the nominee to the extent of the assignee’s interest in respect of the loan advanced does get affected. In other words, in the event of a claim the nominee will be paid the claim amount that remains after repaying the loan and interest.
