Report No. 82
The Aspect of Social Justice
3.1. Fulfillment of legitimate expectations and position of near relatives.-
We have so far discussed the present law as to the effect of nomination in regard to a policy of life insurance and evolution of that law. That there is a conflict of decisions under the present Act is obvious.1 But we are not, in this Report, concerned with the question of merely suggesting a solution that would put an end to the conflict of decisions. Rather, we approach the matter from a different and a broader angle-what ought to be the law as to the effect of a nomination? Should be nominee be regarded as a mere agent, or should he be regarded as having title?
It appears to us that in dealing with this question, one can legitimately make a distinction between cases where the nominee is a near relative of the policy holder and cases where the nominee is a distant relative or a stranger to the family. This distinction is of relevance for the basic reason that the ordinary person, when he makes a nomination in favour of a near relative, may be taken as intending to make a beneficial provision for him and would not contemplate his being a mere agent.
Although the statue uses the expression "nominee", that expression does not, in regard to near relatives, adequately sum up all that the ordinary person has in mind. When he makes the nomination, he does not view the near relatives so "nominated" as a "nominated owner". He looks far ahead and, bearing in mind the future needs of his near relative, sets out to adopt a device which, while not divesting him of his own rights in case he survives the "nominee", would be adequate enough to make an effective financial provision for the person designated by him. Viewed in this light, the present law fails to fulfil the legitimate expectations of the citizen, and needs amendment.
1. Paras. 2.14 and 2.15, supra.