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NIA Life Agent study materials
NIA Life Agent study resources

NIA Life Agent: Nomination and Assignments

NIA Life Agent · Work through your exam, one topic at a time.

All guide sections

Nomination and Assignments

Sections 38 and 39 of the Insurance Act, 1938 govern this domain, and the exam almost always tests the difference between the two. Learn each as a separate mechanism.

Nomination (Section 39)

  • The policyholder nominates one or more persons to receive the policy moneys on death; a minor nominee requires an appointee to receive on their behalf.
  • Can be made at any time before maturity and changed by endorsement or written notice.
  • On the death of the life assured, payment to the surviving nominee discharges the insurer. The nominee holds the money for the legal heirs unless named as a beneficiary - nomination gives the right to receive, not ownership.
  • If the nominee dies first, the nomination lapses and a fresh one may be made; with no valid nomination, the claim goes to the legal heirs with succession proof.
  • Nomination does not transfer any rights; the policyholder keeps control of the policy.

Assignment (Section 38)

  • A transfer of the policyholder's rights to an assignee. Absolute assignment transfers all rights permanently; conditional assignment returns the rights to the assignor if a stated condition is met (for example, survival to maturity).
  • Must be in writing, signed by the assignor, attested by at least one witness, and made by endorsement on the policy or a separate deed.
  • Notice to the insurer is essential for the assignment to bind the insurer; the insurer records it and pays the assignee.
  • The assignee becomes the owner: pays premiums, receives benefits, and may assign again.

Worked example

A borrower assigns a policy to a lender to secure a home loan. Reasoning: a conditional assignment limited to the outstanding balance is appropriate; once the insurer records the notice, payment to the lender to that extent discharges the insurer, with any residue going to the nominee or heirs. Without notice, payment to the nominee still discharges the insurer.

Traps

"The nominee becomes the owner." "Assignment is valid without notice to the insurer." "A conditional assignment is not permitted." "After an absolute assignment the assignor may still nominate."