When you purchase a life insurance policy, it is mandatory to name a nominee—usually a spouse or close family member—who will receive the insurance payout in case of your passing. In most cases, this is a straightforward process. But what happens if both the policyholder and the nominee tragically die together, such as in an accident? Who then is entitled to the insurance payout?
The Insurance Regulatory and Development Authority of INDIA (IRDAI) has clear guidelines on such situations, ensuring that the rightful legal heirs receive the benefit. Let’s break down what you need to know.
What Happens If Both Policyholder and Nominee Pass Away?
This scenario, while rare, can happen during tragic incidents like the recent Ahmedabad plane crash, where entire families perished. In such cases, where both the policyholder and the nominee die in the same event, IRDAI guidelines allow insurers to assume that the nominee died after the policyholder.
In legal terms, this means that the nominee’s legal heirs are entitled to receive the insurance payout. The insurance company will verify the rightful heirs and release the payment accordingly.
Who Can Claim the Insurance Money?
In the event that both the policyholder and nominee are deceased, the legal heirs of the nominee can submit a claim to the insurance company. Before the claim is settled, the insurer will carefully verify the required documents, such as proof of relationship, succession certificates (if applicable), and death certificates.
Understanding Legal Heirs Under Indian Succession Laws
The Hindu Succession Act classifies legal heirs into two broad categories:
✅ Class I Legal Heirs
Includes: Spouse, children, and mother.
If any children are deceased, the grandchildren can claim the amount.
✅ Class II Legal Heirs
If no Class I heirs exist, the claim can pass to: Father, siblings, nephews, nieces, and other relatives.
These laws help establish a clear process for distributing the claim amount if the nominee is no longer alive.
Important Takeaways for Policyholders
✔️ Keep your nominee details updated in your life insurance policy. Life events such as marriage, divorce, or the birth of children can change your priorities—update your policy accordingly.
✔️ Understand that nominees act as trustees, not owners. According to IRDAI guidelines, nominees are simply custodians of the money. The ultimate legal right to the money rests with the deceased’s legal heirs.
✔️ In cases where no nominee is listed, the insurance money will be distributed to legal heirs based on Indian succession laws.
Fact Check:
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IRDAI guidelines confirm that nominees act as trustees.
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Indian courts have consistently ruled that the ultimate right to the insurance amount lies with the legal heirs, not necessarily the nominee.
Conclusion
While no one wishes for such tragic circumstances, understanding these rules can help you plan better for your family’s financial security. If you have a life insurance policy, it is always advisable to regularly review and update nominee details—and ensure your family knows the process to claim in unforeseen events.
Author Profile
- My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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