BENGALURU: The nominee in an insurance policy needs to share insurance benefits with the insured person’s legal heirs if they raise a claim, Dharwad bench of Karnataka HC ruled. Amended section 39 of Insurance Act governing nominations is not intended to override provisions of laws relating to succession like Hindu Succession Act-1956, Justice Anant Ramanath Hegde observed.
“Under the unamended provision, the nominee had an obligation to distribute benefits flowing from the policy to the legal heirs. Under section 39(7), there is no such obligation as long as there is no claim by the legal heirs. In the absence of any claim by legal heirs, the title vests in the beneficiary nominee. However, if there is a claim by legal heir/s, then the nominee’s claim has to yield to personal law governing succession,” the judge said.
Ravi Somanakatti subscribed to two life insurance policies of Rs 19 lakh and Rs 2 lakh as a bachelor, nominating his mother as nominee. He had not made any changes after marriage. After Ravi died on Dec 20, 2019, his wife and minor son filed a suit against Ravi’s mother, Neelavva, claiming a share in insurance benefits.
Trial court rejected the nominee’s claim for entire benefit under the policies, observing that Ravi’s mother, wife, and son are entitled to a one-third share. Neelavva challenged the same before HC. HC upheld the trial court’s decision. TNN