A Death Claim, a Minor Nominee and a Brother Who Says the Money Is His
Sukhdev, 38, a bus driver in Amritsar, died in a road accident six weeks ago. Fourteen months before his death he bought a ₹8 lakh term life policy and paid the premiums by cheque from his salary account; his nine-year-old daughter Navneet was recorded as nominee. He also held a ₹2 lakh fixed deposit with his younger brother Gurmeet as nominee, and a savings account with ₹40,000 and no nomination at all. His widow Manjit, 34, has no income of her own and two children to raise. Gurmeet now says he is 'the nominee, so the fixed deposit is legally mine', and offers to 'keep the insurance money safe' because Navneet is a minor. The insurer's agent has warned the family that the claim will be 'checked' because the policy is less than three years old, and has offered to 'speed it up' for a fee of ₹10,000. Manjit has the death certificate, the policy papers and the passbooks, but has not yet informed the insurer or the bank.
1. Who is entitled to the ₹8 lakh insurance money, and what difference does Navneet's age make?
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Nomination is not inheritance. Under Section 39 of the Insurance Act, the nominee is the person the insurer may validly pay, but the nominee receives the money as a trustee for the legal heirs - here Sukhdev's widow and children. Gurmeet's offer to 'keep the money safe' is therefore not a legal right over the insurance money, and Navneet's nomination does not make her the absolute owner either; it makes her the collecting hand on behalf of the legal heirs.
Navneet is nine, so she cannot give a valid discharge. Where a nominee is a minor, the policyholder may have appointed an appointee under Section 39; if no appointee was named, the insurer will deal with the child's natural guardian, Manjit, on proof of guardianship (the policy schedule, ration card, or a guardianship certificate), and the money must be used for the child's benefit.
On the 'three-year check': under Section 45 of the Insurance Act the insurer cannot call a policy in question after three years from issuance or revival on the ground of misrepresentation; within three years it can, but only for a material misstatement and with written reasons. A 14-month-old policy with an accidental death therefore invites routine scrutiny, especially if an accidental-death benefit rider applies, but scrutiny is not rejection. If the proposal answers were truthful and the premiums were genuinely paid by cheque, the claim is payable. The ₹10,000 'speed-up' fee is a red flag: no one can sell faster payment, and the agent should be reported to the insurer and to IRDAI's grievance channel.
2. Is Gurmeet right about the ₹2 lakh fixed deposit? And what will happen to the ₹40,000 savings account that has no nomination?
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The fixed deposit: partly right in form, wrong in substance. As nominee, Gurmeet is entitled to receive the ₹2 lakh from the bank and to give the bank a valid discharge - that is the whole purpose of nomination, to let the bank pay someone without a succession certificate. But, exactly as with insurance, the nominee holds the amount for the legal heirs of the depositor, that is Sukhdev's widow and children. Gurmeet may not treat it as his own money. If he refuses to hand it over, Manjit can claim as a legal heir; the bank's nominee clause and RBI's nomination guidelines do not convert the nominee into an owner. The one exception worth checking is whether Sukhdev left a will naming Gurmeet as beneficiary - a nomination never overrides a will.
The savings account with no nomination goes directly to the legal heirs, with no nominee in the way. The bank will ask for proof of heirship. Where the amount is small, banks follow their board-approved simplified procedure, accepting a legal heir certificate, affidavit and indemnity instead of a full succession certificate; for larger balances a succession certificate may be required. The ₹40,000 balance should be well within a bank's simplified route.
Action point: Manjit should inform both the bank and the insurer in writing immediately, and should not let Gurmeet operate either account or sign anything on her behalf.
3. Set out what Manjit should do in the next four weeks, with the documents she needs, and the risks she should guard against.
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Week 1 - notify and protect
- Write to the insurer and to the bank branch, quoting the policy number and account numbers, and obtain dated acknowledgements with a complaint or claim reference number.
- Do not surrender the policy or close the accounts; keep the passbook entries intact.
- Collect the original death certificate, the FIR and post-mortem report (the death was an accident), and keep photocopies of everything.
Weeks 2–4 - file the claims
- Insurance: claim form, death certificate, original policy document, proof of premium payments (the cheque/statement showing debits), Manjit's KYC, and proof of guardianship for Navneet; if an accidental-death rider was taken, the accident documents as well.
- Fixed deposit: nomination claim form from Gurmeet, or a legal heir claim with a legal heir certificate.
- Savings account: application as legal heir with a legal heir certificate or the bank's simplified affidavit-and-indemnity route for small balances.
- Apply for a legal heir certificate from the tehsil or the civil court route, since it will be needed more than once.
- Check whether Sukhdev's employer or any cooperative or union scheme carries group personal accident cover, which is often forgotten.
Risks to avoid Never pay an agent a percentage or a 'speed-up' fee; claim processing is free. Do not sign blank forms, a power of attorney in someone else's favour, or any release for less than the sum assured. Ignore anyone offering to 'arrange' a succession certificate informally. Keep a single file with acknowledgements, and if the insurer does not respond, escalate to its grievance redressal officer and then to the IRDAI grievance channel, with the banking route (the RBI's integrated ombudsman) for the bank matters.