Due to the focus on increasing FDI in the insurance sector, an important aspect of the Insurance Amendment Act of 2015 went unnoticed. This clause makes it easier for the relatives of the insured to claim the insurance product once the insured is discharged.
This clause avoids the possibility of disagreement between family members on death subsidies. Until now, a candidate for life insurance has not been considered a beneficiary. They are like the recipients of the insurance proceeds on behalf of the insured’s legal heirs.
In accordance with the new law, a segment of “hot candidate” has been created. It only includes the previous father of the insured. If the insured person names their parents, spouse, or children as their representatives on a temporary plan today, they will become the ultimate beneficiaries of the claim proceeds.
Previously, insurance companies in India could award the claim benefits to the candidate, and then other legal heirs could claim the candidate’s benefits. If the legal heirs now make use of the benefits, the insurer only pays the benefits to the beneficiaries.
In fact, this new clause also gives policyholders the freedom to mention various nominees and their contribution to the product. The prospective servicer may act as the trustee responsible to the legal heirs of the benefits provided by the online life insurance.
If a candidate is also named legal heir, she is entitled to the share of the death benefit according to the laws of inheritance. Here the insured can appoint anyone as a representative, including a trust.
In general, the main cause of dispute has been found to be that other legal heirs claim rights to the policy proceeds. It is advisable to designate a beneficiary to reduce the risk of disputes.