Income Tax Benefits in Single Premium Life Insurance Plans It is importa...
Assignment of a Life Insurance Policy simply means transfer of rights from one person to another.
The person who assigns the policy, i.e. transfers the rights, is called the Assignor and the one to whom the policy has been assigned, i.e. the person to whom the policy rights have been transferred is called the Assignee.
Thus, the owner of the policy who decides to transfer the rights to someone else, is called Assignor.
Once the rights have been transferred to the Assignee, the rights of the Assignor stands cancelled and the Assignee becomes the owner of the policy. Nomination stands cancelled once the policy has been assigned. Hence the assignor’s legal heirs and nominee have no rights on the policy whatsoever. Then the Assignee becomes the owner of the policy and he may choose to transfer the policy or assign is to someone else!
Let us understand by taking an example:
Akash owns a life insurance policy of Rs 5 lacs which he wishes to assign to Bijay as a gift. Thus, Akash is the Assignor and Bijay is the Assignee. Once the policy is completely assigned to Bijay, he becomes the owner of the policy and Akash has no right on the policy anymore. Even his legal heirs and nominee cannot claim the money once the life insured dies.
Now, Bikash may choose to re-assign the policy to Chirag. In this case, Bikash is the Assignor and Chirag is the Assignee.
Thus, the owner can assign and re-assign the policy to anyone else also. The person who assigns is called the Assignor and to whom the policy rights are transferred is called the Assignee.
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