Assignment in LIC Policy
The process of transferring the title rights, and interest on assets or property from one person to another person is known Assignment. Assignment is generally done to provide security against loan
Assignor : The person or policy holder who transfers the title on the assets or property is known as the assignor
Assignee : The person to whom the title on assets on property is transferred is known as the assignee.
Feature of Assignment in LIC Policy
- Assignment can be done only after purchase of a policy
- Assignment is applicable to all kinds of insurance plans except pension plans
- Assignor should have complete ownership of the policy. The life assured is minor of is not the policy holder or proposer, does not have any rights over the policy, hence cannot assign the policy
- After assignment the assignee gets complete ownership and rights over the policy including death benefit. He can even surrender the policy
- Assignment can be done towards a person or an institution
- Insurer has to record the fact of the assignment in their record
- Assignment once made cannot be cancelled. Policy can be re-assigned in the name of the life assured.
- The policy would be re-assigned to you and the repayment of the loan. A fresh nomination should be done after assignment of the policy
Types of Assignment
There are two types of assignment:
- Conditional Assignment: In this type of assignment, the rights, title and interest in the policy automatically revert back to the assignor:
The conditions are:
- On the death of the assignee before the death of the assignor
- The assignor survives the date of maturity of the insurance policy
- The loan is repaid
If the condition becomes effective it is automatic revert back to the assignor
- Absolute Assignment: In this type of assignment the rights, title and interest of the assignor passes completely to the assignee. Absolute assignment is generally done for valuable consideration the policy vests in the assignee absolutely and forms part of his estate on his death.
- Original bond paper (for pasting endorsement)
- KYC Documents
- Assignment form 3855
- Re-assignment form 3848
Process of assignment in LIC Policy:
The assignment can be done by either of the following process:
- Making an endorsement on the LIC Policy document, In this process the stamp duty is not required. The assignment form along with the policy should be duly signed by the assignor, assignee & a witness.
- Execute a separate assignment deed in this case stamp duty needs to be paid.
- The assignment will be effective when the insurer only if it is registered with the insurer in their records. The date on which the notice of assignment is delivered to the insurer shall regulate the priority of all claims under a transfer or assignment.