A life insurance policyholder can transfer rights of the policy to another person with certain conditions. This is known as conditional assignment of life insurance policy. The policyholder's rights are restored once conditions are fulfilled. The policyholder is the assignor and the person to whom the policy is assigned is the assignee.
It can be obtained from the insurance company or agent. Assignor and assignee details must be filled. It will indicate the condition for assignment, percentage of sum assured assigned, reason for assignment and who will pay the future premiums.
The assignor and the assignee are required to provide a declaration to the insurance company in the specified format. The assignor's declaration will state that the assignment is being made on his own volition and not for the purpose of trading. The assignee's declaration will state that in case the assignee predeceases the assignor, or the assignor survives the policy term, the amount will be payable to the nominee.
Original policy must be enclosed with the form, supported by the following documents of the assignee:
Self-attested income document
Copy of self-attested photo ID proof and address proof
Self-attested copy of PAN Card
Once the required documents and forms are submitted to the insurance company and verified, the insurer will record the conditional assignment. Upon payment of a prescribed fee, the assignee can obtain an acknowledgement of notice of assignment from the insurance company. This serves as conclusive evidence against the insurance company that it has received the notice of conditional assignment.
Points to note
Policies issued under the Married Women Protection (MWP) Act cannot be assigned.
The assignee has the right to surrender the policy if the conditions are not fulfilled by the assignor.
Assignment automatically cancels any nomination registered against the insurance policy.