There have been several cases where individuals name their parents or siblings as nominees for insurance policies prior to marriage. Post-marriage, such individuals often fail to update their nominees to include their spouse and children. This oversight leads to legal conflicts between the spouse, children, and the deceased’s parents over the insurance claim.
Rights of Nominees vs. Legal Heirs
Does the nominee solely hold the right to claim an insurance payout after the policyholder’s death? Or do the legal heirs of the deceased have an equal right to the insurance claim?
Such disputes have come to light frequently. In many cases, nominees are not updated after marriage, triggering conflicts among surviving family members.
Court Ruling
Recently, the Karnataka High Court addressed a similar dispute. In this instance, the deceased individual had named his mother as the nominee before marriage. Upon his death post-marriage, his wife and mother engaged in a legal battle over the insurance proceeds.
The Karnataka High Court ruled that a nominee does not have an absolute right to the entirety of the insurance claim. The court clarified that legal heirs of the deceased, including the spouse, children, and parents, can also stake a claim on the insurance amount.
Legal Precedence on Nominee and Legal Heir Rights
This case, Nilavva alias Neelamma vs. Chandravva alias Chandrakala alias Hema & Others, highlighted a key legal interpretation. The court stated that Section 39 of the Insurance Act, 1938, does not override the rights of legal heirs under inheritance laws.
Justice Anant Ramnath Hegde of the Karnataka High Court ruled that the nominee is entitled to the insurance claim only if the legal heirs do not contest the amount. If both legal heirs and nominees stake a claim, the proceeds must be distributed equitably among all parties. Legal heirs typically include the deceased’s parents, spouse, and children.
Conclusion
In this case, the deceased had nominated his mother before marriage and failed to update the nominee post-marriage, despite having children. Upon his death in 2019, a dispute arose between the wife and mother over the insurance amount.
The court ordered that the insurance proceeds be divided equally among the deceased’s mother, wife, and children, granting each one-third of the total amount.