We all know that nomination is the best way to protect your investment to reach your near and dear. But do you know each product have it’s own meaning and definition of nominee? So let us understand those rules in simple ways.
1) Nomination for Life Insurance-Nominations in Life Insurance are governed under the rule Sec 39 of Insurance Act 1938. In simple lines we can say that, you can appoint more than one nominee in Life Insurance to receive policy amount in the event of the policy converting to death claim. But will nominee be a legal owner of claim amount? No…he is just a caretaker of assets. He can hold assets as a trustee and final distribution will be based on legal heir. For example, suppose Mr.X who is married, took life insurance policy and nominated his father as nominee. In such case who will be legal beneficiary of claim amount? Eventhough Mr.X nominated his father as the nominee, still his wife who is the legal heir class I will be the legal beneficiary of the claim amount. Mr.X’s father is just can act as if the trustee to transfer the claim amount to his wife.
Now in above case if Mr.X have 2 children then still his wife be the sole beneficiary of claim amount? No, because his widow and 2 children form the legal heir I category according to Hindu Succession Law. So his widow and 2 children will have to distribute the claim amount equally.
But keep in mind that if Mr.X have will then Hindu Succession Act will be considered as secondary. Will is considered as the major document to distribute the claim amount.
2) Nomination for Bank Accounts and other Govt Saving instruments–According to Section 45ZA(2)(Banking Regulation Act), nominee merely get exclusive right to receive money from bank. But he is not the the owner of money. But point to be noted here is, banking laws will not concerned about succession acts. Hence banks responsibility end once they transfer the amount to nominee. But it is the nominee’s legal responsibility to act as a trustee and transfer the money according to succession act.
3) Nomination for Mutual Funds–In mutual funds you can nominate upto 3 nominees for single folio and even you can distribute the % of sharing. Nowadays it is mandatory for mutual fund investors to specify whether they want to nominate or not. If they don’t want to nominate then they need to declare it by signing. If they want to nominate then they need to declare atleast one nominee. Here also nominee acts as if the trustee but not as a real beneficiary of amount.
4) Nomination to PPF-It is very important to exercise nomination facility for PPF account. If account holder dies and there is no nomination at the time of death, the balance in the account, if it is upto Rs.1,00,000, will be paid by the Accounts Office to the legal heirs of the deceased on receipt of application in Form G supported with necessary documents without the production of succession certificate. If the balance is more than Rs.1,00,000 then production of Succession certificate is mandatory.
5) Nomination to your shares-One of the different and interesting rules applies to your shares only. Here nominee will be the legal owner but not the legal heirs. Suppose Mr.X nominated his brother and died without will then eventhough his wife will be considered as legal heir I category but his brother will be treated as the owner. So when making nomination you need to take care that your nominee will be legal heir, else create a will to whom those shares to be transfer in case of your death.
Reason for such change is, different acts. In case of shares, Section 109(A) of the Companies Act and 9.11 of the Depositories Act, nominee will be treated as the legal owner in case of death of the deceased.
So based on each asset class and product you are investing, read fully what do you mean by nominee and accordingly nominate. It is fatal if blindly you nominate thinking that your nominee will receive all your money in case of your death.
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Hello Sir,
My husband has passed away recently, he has taken term insurance in the year 2020, with me as 100% nominee. I have a 3-year old son. My mother in law now claims she has 1/3rd share as per Hindu Succession Act.
Also, for office benefits my husband made his mother as nominee before marriage and he didn't change it later. Will that nomination be valid? As that was before marriage?
Dear Lakshmi,
You have all rights over the term life insurance. Regarding office benefits, she just acts like a trustee. She has to handover benefits to you.
My husbund expired i am nominee in tearm plan but my mother in low demand 50% as leagal heir and file case apposite to me
Dear Asha,
Her case will not stand.
Mere father 1986 meh expire ho gaya tha, veh Food And Drug Controller meh, Food Inspector ke post meh teh. Lekin meri maa ko abhi tak pension nahi mila aur meri mother ke pass sirf father ka death certificate ke alava kuch nahi hai. Toh mah apni mother ke pension ke leya kaunse court meh jao, civil court ya consumer forum court.
Dear Pinki,
First approach the department to know the status.
Dear sir, my brother made 2 policy..In one policy he made his wife as a nominee bit after dispute started and he applied for divorce..after application of divorce he took one more term policy in which he made his son and his married sister as 50-50% nominee so that sister can take care his parents..as divorce case is pending but he died in a accident..now wife is claiming even his sister's amount as a legal heir..so what are the option for us to get this amount
Dear Piyush,
In the case of Life Insurance, the one who was nominated will get the money.
Sir my husband recently expired .he opened account in Andhra Bank he nominated his sister name 2005. But my marriage Done on 2009
He is recently expired with heart attack.we have marriage certificate also .I have any right to claim this insurance amount.plz tell me sir
Dear Vasantha,
Yes, as you are the first legal heir, you can approach the bank.
Hi,
Recently My Uncle Passedaway in an accident.and he made his sister as Nominee in all LIC Policies as well in the Fixed Deposit Accounts.its all because my uncle wife didnt live with my uncle by 28 years.so he did all nomination as his sister...Please let me know whether she can able to Receive the benefits of the same or she has to handover the benefits to my unlce wife.
Dear Arockia,
It is hard to say anything without knowing the legal matters like whether your uncle and aunt divorced legally or not. Hence, I suggest you to consult a lawyer in this regard.
Dear Sir,
My father died in 2016 and in his Demat account my younger brother is nominated and right now he is denying to give anything as a part of it. So what kind of legal proceedings can be done in it and also he has transferred all the major portfolios in his own Demat account. So please guide me to get my right.
Dear Nimisha,
He is wise enough that he already transferred major things in his name. Better to take the help of legal experts.
Ok Thank You So Much for your valuable guidance ?
Sir mere husband ki death ho chuki hai....Mere husband ke kvp and nsc me mere husband ke bhai nominee hai......Wo iska benefit mujhe deno ko tayyar nah hai ...Mere husband ki ek beti bhi ha jo minor hai.mai unki wife hu aisa koi law hai jo ye benefit direct mujhe ya meri beti komil. sake ....Pls mujhe batai.
Dear Meenakshi,
You approach the post office and claim the amount as you are the legal heir of your husband. Don't delay the process.
Dear Sir/Madam
Please help maine apni policy mai apni wife ko nominee rkha hai but policy mai after marriage Kreeti Gandhi likha hai but as per record of id and bank account before marriage ka hai yani kreeti malhotra hai toh wo claim kr skti hai agar kbi lena pde toh
Bharat-Better to rectify it NOW.
Sir
Agar ise thik na kraye toh koi dikkat hogi because mere pass marriage certificate hai
Sir
Kaise thik kra skte hai koi tarika
Bharat-Contact where it is.
Bharat-May be or may not be. Why to take risk?
Sir my sister was being married in 2013.and my sister's husband passed away in 2014..my sister's husband was a government servant..even he had been lif insurance policy .but my sister didn't know about this and after the husband death his family took all the insurance money.. Because they all are nominees in life insurance policy.. After this my sister came at mother's home. Even when she had gone her husband's office. She find that in the office record of her husband his family was nominated.. So my sister apply to the job. Person etc. But after 3 years office didn't give a one rupees or ,pension or any job. Even they are saying that graduaty will be given of deceased family.. Sir office clerks and officers always said to my sister we will give you pension and job there will be took some time.. Sir what should do
Sudhir-Legally your sister has rights over all the assets of her husband.
Thank you sir..but one more question what should we do wait or legal action.. Could you suggest.
Sudhir-Legal action.