Report No. 137

5.12. Nomination under life insurance policies.-

While it is outside the scope of the subject-matter of this report it may not be inappropriate to suggest that a similar formula can be adopted in respect of nominations under life insurance policies in the context of the recommendation made by the Commission in its 82nd report presented more than a decade ago on 2nd February, 1980.

5.13. For, even in respect of life insurance policies, the public at large is perhaps unaware of the true legal position. Many of the persons seeking the protection of insurance policies may well be labouring under the misconception that the nominee would become an absolute beneficiary in his or her own right. The same would be the case with regard to those who are covered by the Act and the Scheme. It is, therefore, essential in the interest of all concerned that the position of law is settled.

As has been recounted earlier, the Commission has already recommended amendment of the Life Insurance Act with a view to making a nominee a person in whom the beneficial interest would vest to the exclusion of other heirs. Since, however, no decision has been taken on the recommendation of the Law Commission, the matter is still not free from vagueness in the sense that the members of the public may not be fully aware of the implications of nominations and the import of the decision of the Supreme Court in Sarbati Devi's case. That is why the course suggested in para 5.12 read with para 5.11 hereinabove deserves to be adopted.

We recommend accordingly.