The Karnataka High Court has ruled that a nominee in an insurance policy is not automatically entitled to the entire insurance amount. Legal heirs can also stake a claim.
This decision came in a case where a man had taken an insurance policy before marriage, naming his mother as the nominee.
After his death, a dispute arose between his mother and his wife over the claim.
The court clarified that if the legal heirs of the deceased assert their rights, the nominee does not get full ownership of the insurance proceeds.
Court’s Clarification on Legal Provisions
The court emphasized that Section 39 of the Insurance Act, 1938 does not override laws like the Hindu Succession Act, 1956.
This ruling came in the case of Neelavva alias Neelamma vs Chandravva alias Chandrakala alias Hema and others, where the main issue was determining the rightful claimants of the insurance amount.
Legal Heirs Can Stake a Claim
Justice Anant Ramanath Hegde stated that a nominee benefits only if the legal heirs do not claim the insurance amount.
If legal heirs such as the wife, children, or parents come forward, the division must follow succession laws.
Background of the Case
In this case, a man named his mother as the nominee before marriage. Even after getting married and having a child, he did not update the nominee details.
After his death in 2019, a dispute arose between his mother and wife over the claim.
The High Court upheld the lower court’s decision, ruling that the insurance amount should be divided equally among the deceased’s mother, wife, and child.
This ruling reinforces that nominees do not have exclusive rights to an insurance claim when legal heirs are involved.
