TITLE IN LIFE INSURANCE :
A life insurance contract provides both survival and death benefits. Hence it is important to ascertain the ownership title to the contract at all stages of benefit payment. While usually the title to the insurance contract is held by the Policyholder, where the policy has been assigned, the title to the contract passes on to the Assignee and therefore the Assignee assumes the right to receive all survival and death benefits under the contract.
In case of a benefit payable on death, the title to the contract passes on to the Assignee or nominee as the case may be. As discussed earlier, where a policy is assigned, the nomination is treated as cancelled and accordingly, the death benefits become payable to the Assignee. The title to the contract is always determined based on the policy records as available with the Insurer.
There are policies taken by the parent/legal guardian covering the life of a minor child where the benefits are intended to be passed on to the child when the child attains the age of majority. These are typically termed ‘juvenile’ policies. In these policies, the parent/ legal guardian holds the title to the policy on behalf of the minor child till the child attains the age of majority. The policy provisions are designed in a manner such that the title to the policy automatically vests in the life assured, upon the child attaining the age of majority.