The Insurance Laws (Amendment) Bill, 2008 in India: Legal Position of a Nominee

Life insurance certainly serves as a tool of financial security against risks ensuing from unfortunate loss of the bread winner of a family. However it is crucial for the insured to make sure in advance that on his death the proceeds should go to his beneficiaries. Accordingly they nominate their family members, assuming that in case of unforeseen contingencies the latter will get title to the proceeds. However reality is far away from intentions. Distinct construals by different courts regarding the legal position of a nominee coupled with lack of awareness of the same among people are a cause of grave concern. This warrants immediate attention by law-makers through amendments to the Insurance Act, 1938 as are comprehensible to all market participants and also bring consistency in interpretation of the law. In this context the paper highlights the legal status of a nominee as interpreted by different courts in India, the tribulations arising out of the same and the efficacy of the new Insurance Laws (Amendment) Bill, 2008.