How a nominee claims money on a life-insurance policy after the policyholder dies

A nominee under a life-insurance policy is the person the policyholder has named, in the prescribed form, to receive the policy money on his death. The deceptively simple word "nominee" has a complicated legal history in India — for thirty years after the Supreme Court's decision in Sarbati Devi v Usha Devi, (1984) 1 SCC 424, the nominee was treated as a mere agent for receipt, holding the money in trust for whoever inherited under the personal law of succession. The Insurance Laws (Amendment) Act, 2015 broke that rule for one specific class of nominees by inserting Section 39(7) and 39(8) into the Insurance Act, 1938 — where the nominee is the policyholder's parent, spouse, child, or a combination of them, the nominee now takes the policy money as beneficial owner, and the heirs cannot demand it. The procedure for filing the claim itself is governed by Regulation 14 of the IRDAI (Protection of Policyholders' Interests) Regulations, 2017, which fixes settlement timelines that insurers routinely miss in early-claim or investigation cases. This guide walks the documentation pack, the timelines, the post-2015 Section 39 question of who owns the money, and the case-line on repudiation — LIC v Asha Goel, (2001) 2 SCC 160; Reliance Life Insurance v Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175; Sulbha Prakash Motegaonkar v LIC of India, (2015) 9 SCC 720.

A life-insurance policy in India is a contract under which the insurer agrees to pay a fixed sum to the policyholder or to his nominee on the policyholder's death — and unlike fire or marine cover, it is not a contract of indemnity but a contract of pure contingency. The Supreme Court has held this since at least LIC v Dharam Vir Anand, (1998) 7 SCC 348, and the Madras line going back to C Duraiswami Iyengar v United India Life Assurance Co Ltd, AIR 1956 Mad 320, sourced in the older English authority Dalby v India and London Life Assurance Co, (1854) 15 CB 365. The consequence for the nominee filing a claim is that the insurer's liability does not turn on proof of loss — it turns on three preliminary questions: was the policy in force on the date of death, is the nominee the person entitled to receive payment, and was there any fraudulent suppression of material fact at the time the policy was effected that survives the Section 45 three-year bar. The bulk of disputed claims fail on the third question, not the first two.

The two-stage framework — what the law gives the nominee

The procedural framework comes from two sources working together. The first is the Insurance Act, 1938 — Sections 38 (assignment), 39 (nomination), 39(6) (a notice of assignment under Section 38 cancels a nomination earlier made), 39(7) and 39(8) (the post-2015 beneficial nominee), and Section 45 (the three-year absolute bar on repudiation, in its post-2015 form). The second is the IRDAI (Protection of Policyholders' Interests) Regulations, 2017, made by the Insurance Regulatory and Development Authority of India under the Insurance Act and the IRDA Act, 1999. Regulation 14 of the 2017 regulations fixes the time within which a life-insurer must settle, repudiate, or call for further documents — and provides the statutory hook for an ombudsman complaint or a consumer-commission case where the insurer drags the file.

The Supreme Court in LIC v Asha Goel, (2001) 2 SCC 160 framed the duty on the insurer at the claim stage in terms that are still good law: "The public in general and crores of policyholders in particular look forward to prompt and efficient service from LIC. The authorities in charge of the management of the affairs of LIC should bear in mind that its credibility and reputation depend on its prompt and efficient service. The approach of LIC in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner." The standard in Asha Goel applies to private life-insurers as well — they are subject to the same IRDAI framework.

The doctrinal puzzle — Sarbati Devi (1984) and what the nominee actually owned

Until the 2015 amendment to Section 39 of the Insurance Act, the question of what the nominee got was answered by the line of Supreme Court cases beginning with Sarbati Devi v Usha Devi, (1984) 1 SCC 424. In Sarbati Devi, the Court held that a nomination under Section 39 did not amount to a third-party assignment of the policy under Section 38; it merely indicated the hand which was authorised to receive the amount on payment of which the insurer's liability would be discharged. The nominee was therefore a "mere agent for receipt" — the money received continued to belong to the estate of the deceased policyholder, devolved on his heirs under the personal law of intestate succession (Hindu Succession Act, 1956 for Hindus; relevant provisions of the Indian Succession Act, 1925 for Christians and Parsis), and the heirs could sue the nominee for an account.

The Supreme Court reaffirmed the rule in Shipra Sengupta v Mridul Sengupta, (2009) 10 SCC 680 in the context of a Provident Fund nominee, by reference to Sarbati Devi. Two reasons drove the doctrine: first, the Insurance Act of 1938 did not by its language carry the strong words of beneficial transfer found in, for example, Section 39 of the Married Women's Property Act, 1874; and second, the nomination form was easy to fill in and easy to forget — treating it as a substantive transfer of the policy money in derogation of personal-law inheritance would have produced a stream of upsets to intestate succession that the legislature could not have intended. Sarbati Devi was, on its own terms, a rule for the policyholder's protection — the policyholder could change the nomination at any time without the nominee's consent, and on death the personal law of succession governed.

The 2015 amendment — Section 39(7) and the new "beneficial nominee"

The Insurance Laws (Amendment) Act, 2015 — which also overhauled Section 45 — inserted new sub-sections (7) and (8) into Section 39 to create a distinct class of nominee. Where the policyholder names a parent, spouse, child, or any of them, as nominee, that nominee is now to be treated, on the death of the policyholder, as the beneficial owner of the policy money, to the exclusion of any other person entitled to the estate of the deceased. The heir under the personal law has no claim against this class of nominee — the nominee keeps the money. Section 39(8) makes the same rule applicable where the policyholder, in addition to the named class, also names the legal representative of a deceased nominee in that class.

The amendment did not in terms overrule Sarbati Devi; it carved a beneficial-ownership exception for the specified family-relation nominees and left the older rule in place for everyone else. The practical effect is a four-way matrix: (i) policy taken before 26 March 2015 — Sarbati Devi still governs; the nominee, even if a spouse or child, is a mere agent for receipt and the heirs can claim; (ii) policy taken on or after 26 March 2015 with parent/spouse/child nominee — Section 39(7) governs; the nominee is beneficial owner; (iii) policy on or after 26 March 2015 with any other nominee (sibling, friend, distant relative) — Sarbati Devi governs by default; the nominee is agent for receipt; (iv) policy with no nomination at all — succession certificate under Section 372 of the Indian Succession Act, 1925, or letters of administration / probate if a will exists. The line of high-court decisions reading the amendment is still developing; the safe practical reading is the prospective one.

Section 38 assignment — the cancellation rule in Section 39(6)

Where the policyholder, during his lifetime, validly assigned the policy under Section 38 by an instrument of assignment with notice to the insurer, Section 39(6) of the Insurance Act provides that any nomination earlier made stands automatically cancelled. The assignee — not the nominee — is the person entitled to the policy money on the policyholder's death. The Bombay High Court in Insure Policy Plus Services (India) (P) Ltd v LIC, AIR 2008 (NOC) 1083 (Bom) struck down an LIC circular that purported to restrict revival of lapsed policies at the behest of assignees who had otherwise complied with Section 38 — the right of the assignee under Section 38 is a statutory right that the insurer cannot abridge by circular. A nominee filing a death claim therefore needs to verify that the policy had not been assigned out from under her — the policy file with the insurer will show the assignment if any.

Section 45 — the three-year absolute bar after 2015

Section 45 of the Insurance Act, 1938 governs the insurer's power to repudiate a life-insurance claim on the ground of misrepresentation or suppression of material fact in the proposal form. The provision was substituted by the 2015 amendment with effect from 26 March 2015 and now reads, in substance, that no policy of life insurance shall be called in question on the ground of misstatement or suppression after the expiry of three years from the date of issuance, the date of commencement of risk, the date of revival, or the date of any rider — whichever is later. Within the three-year window the insurer may repudiate on grounds of fraud after disclosing the grounds in writing to the nominee or legal representatives. After three years the bar is absolute — even fraud cannot reopen the policy.

The pre-2015 version of Section 45 — analysed in the foundational decisions Mithoolal Nayak v LIC of India, AIR 1962 SC 814 and LIC v G M Channabasamma, (1991) 1 SCC 357 — required the insurer to prove three things to repudiate after two years: that the suppressed or misstated fact was material; that the suppression or misstatement was fraudulent; and that the policyholder knew the statement was false. The Supreme Court in Channabasamma held that the burden of proving all three conditions rests on the insurer, and reaffirmed that approach repeatedly. The post-2015 Section 45 retains the burden but shortens the window and makes the post-three-year bar absolute — the policy effectively becomes incontestable. The Supreme Court in Sulbha Prakash Motegaonkar v LIC of India, (2015) 9 SCC 720, applying the pre-2015 Section 45 to a policy that had crossed the two-year line, held that an insurer who has not affirmatively pleaded and proved fraud cannot escape liability on the ground of a non-material misstatement.

Reliance Life v Rekhaben Rathod (2019) — what counts as material

The Supreme Court in Reliance Life Insurance Co Ltd v Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 sharpened the materiality test. The Court held that a contract of life insurance is a contract uberrimae fidei — of utmost good faith — and that the proposer's duty to disclose extends to every fact that would influence the judgement of a prudent insurer in fixing the premium or deciding whether to take the risk. Suppression of an existing life-insurance policy with another insurer was held to be a material fact going to the moral hazard and the underwriting decision, and the insurer was held entitled to repudiate within the three-year window. The decision sits alongside the older line in Satwant Kaur Sandhu v New India Assurance Co Ltd, (2009) 8 SCC 316 and is the leading authority for what insurers must prove and what proposers must disclose. Within the three-year window, Rekhaben Rathod is the insurer's weapon; beyond three years it is academic, because Section 45 closes the door.

IRDAI 2017 Regulation 14 — the claim-settlement timelines

The procedural piece sits in the IRDAI (Protection of Policyholders' Interests) Regulations, 2017. Regulation 14 fixes the time within which a life-insurer must act on a claim. Where the insurer does not require investigation, settlement (payment, or rejection in writing with reasons) must happen within thirty days of receipt of the last necessary document from the nominee. Where investigation is required — typically in an "early claim" (death within the first two or three years of the policy) or where the insurer suspects misstatement — the investigation must be completed within ninety days of the date of receipt of the claim intimation, and the decision must be communicated within a further thirty days. A delay beyond these periods carries interest at the bank rate plus two per cent on the claim amount, payable to the claimant. The Regulation 14 framework is enforceable through the Insurance Ombudsman scheme under the Insurance Ombudsman Rules, 2017, through the District / State / National Consumer Disputes Redressal Commissions under the Consumer Protection Act, 2019, and in writ jurisdiction against state-instrumentality insurers under Article 226 of the Constitution.

The documentation pack — what the nominee actually carries to the insurer

The basic claim-documents list that every life-insurer asks for is shaped by Regulation 14 and the insurer's claim-form template (most insurers use a Form A claim form keyed to NEFT disbursement). The standard pack is — (i) the insurer's claim form, signed by the nominee; (ii) the original policy bond; where the bond is lost, an indemnity bond on stamp paper with one or two sureties plus an affidavit of loss (Form A2 with most insurers); (iii) the death certificate issued by the local Registrar of Births and Deaths under the Registration of Births and Deaths Act, 1969 (now read with the 2023 amendments digitising the register); (iv) the cause-of-death certificate from the attending physician or hospital; (v) where the policyholder died in hospital, the hospital records — discharge summary, treatment notes, and the medical certificate of cause of death; (vi) where the death was accidental, the police First Information Report under Section 173 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (Section 154 of the Code of Criminal Procedure, 1973), the post-mortem report, and the inquest report; (vii) where the death was unnatural in any other way, the same chain plus a final police report under Section 193 of the BNSS (Section 173 of the CrPC, 1973); (viii) the nominee's KYC — Aadhaar and PAN, and a recent photograph; (ix) a cancelled cheque or pre-printed bank-account statement for NEFT credit; (x) age-proof of the deceased policyholder if not previously admitted at the proposal stage — the Section 45 bar does not affect the insurer's right under the proviso to call for age proof at any time, and a wrong age admitted later is corrected by adjustment of premium and sum assured, not by repudiation, see Anand Kumar Kejriwal v LIC, AIR 2011 (NOC) 375 (NC).

Where the policy carries an accidental-death-benefit (ADB) rider, add the post-mortem report, the police FIR, and any panchnama or inquest material connecting the accident to the cause of death. The proximate-cause line in Indian accident-policy jurisprudence — running through cases like Sandeep Kumar Chourasia v New India Insurance Co Ltd, (2013) 4 SCC 270 — turns on whether the death was directly and proximately caused by the accident, and the documentary chain has to establish that link. Where the policy is an "early claim" (death within the first two or three years of issuance, or within two years of revival), the insurer will additionally call for a Q1 questionnaire and an investigation under Regulation 14; the claim form will route through the insurer's investigation cell rather than the settlement desk.

Where there is no nomination — succession certificate or probate

If the deceased policyholder did not nominate anyone, or if the nominee predeceased the policyholder and no substitute was named, the policy money does not become unclaimed — it becomes payable to the legal heirs of the deceased. The insurer will not pay on a bare letter of heirship — it will call for a succession certificate granted by the District Judge under Sections 370 to 388 of the Indian Succession Act, 1925, or, where the deceased left a will, for probate (Section 213 of the Indian Succession Act, read with Section 57) or letters of administration. The succession-certificate route is the standard for life-insurance proceeds, because the certificate specifically covers debts and securities, and life-insurance is treated as a debt due from the insurer. The procedure is the subject of the companion article on the succession certificate (article 079). The case-line on Class I heirs under the Hindu Succession Act, 1956 — see for example the resolution in Shubhangi Shivjirao Ghatge v LIC, (1997) 10 SCC 308, where the mother as a Class I heir took a one-fourth share alongside the widow and children — governs the inter-se distribution when the certificate is issued.

Repudiation — the route from rejection to recovery

If the insurer repudiates the claim, the nominee has four cumulative routes. First, an internal grievance under the insurer's own grievance-redressal mechanism — every IRDAI-licensed insurer is required to maintain a designated grievance-redressal officer and to issue a written response within fifteen days. Second, a complaint to the Insurance Ombudsman under the Insurance Ombudsman Rules, 2017, where the policy value is up to fifty lakh rupees and the complaint is filed within one year of the insurer's final reply; the ombudsman's award is binding on the insurer up to thirty lakh rupees. Third, a consumer complaint under the Consumer Protection Act, 2019 — Section 34 (district commission, claims up to one crore), Section 47 (state commission, one crore to ten crore), Section 58 (national commission, above ten crore); a life-insurer is a "service provider" under Section 2(7) and repudiation of a valid claim is "deficiency in service" under Section 2(11). Fourth, a writ under Article 226 of the Constitution against state-instrumentality insurers like LIC of India — the route is narrow and used mainly to challenge arbitrary action or to invoke fundamental-fairness review, see for example LIC v Consumer Education & Research Centre, (1995) 5 SCC 482 and Sharda Devi v State of UP, AIR 2009 All 12 in the welfare-scheme context. The mediclaim-repudiation overlap is the subject of article 143; the route from refusal to pay-out is the subject of the companion article 137.

The case-line in one paragraph

The doctrinal arc starts with Dalby v India and London Life Assurance Co, (1854) 15 CB 365 settling that life insurance is contingency, not indemnity, and that the insurable interest must exist at the date of the policy but need not subsist at death. Mithoolal Nayak v LIC of India, AIR 1962 SC 814 fixes the three-part test for repudiation under the old Section 45. Sarbati Devi v Usha Devi, (1984) 1 SCC 424 makes the nominee a mere agent. LIC v G M Channabasamma, (1991) 1 SCC 357 puts the burden of proving fraudulent suppression on the insurer. LIC v Asha Goel, (2001) 2 SCC 160 calls for extreme care and caution before repudiation. Shipra Sengupta v Mridul Sengupta, (2009) 10 SCC 680 reaffirms Sarbati Devi in the PF nominee context. Sulbha Prakash Motegaonkar v LIC of India, (2015) 9 SCC 720 anchors the materiality and burden tests in the pre-2015 era. The 2015 amendment then rewrites Sections 39 and 45 — beneficial nominee in, three-year absolute bar in. Reliance Life Insurance v Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 sets the new materiality benchmark within the three-year window. The nominee filing a death claim today reads the law through that arc — pre-2015 policy or post; within three years of the policy or beyond; named family-relation nominee or general nominee. The procedure is then mechanical: the documentation pack, the IRDAI timeline, and the four-route repudiation ladder.

What the nominee should not assume

The most common nominee-side error is to treat the death certificate plus the policy bond as a complete claim. The insurer is entitled to call for cause-of-death documentation, hospital records, age proof, and (for an early claim) a Q1 questionnaire and investigation report. The second error is to delay intimation in the hope of cleaning up the documents — Regulation 14 runs from the date of receipt of the last necessary document, but every insurer's policy bond carries a "reasonable time" intimation clause (usually thirty to one hundred and eighty days), and an unexplained delay invites an inference of suppression. The Supreme Court in cases such as Galada Continental Pvt Ltd v Union of India, (2016) 12 SCC 152 has held that delayed intimation, without more, is not fatal to a contractual claim where the insurer has not been prejudiced; the practical advice is to intimate within thirty days of the death and to complete the documentation pack within ninety days. The third error is to assume that an inter-class dispute between the nominee and the heirs is for the insurer to resolve — it is not. The insurer pays the nominee on proof of death and discharges its liability; the inter-se dispute between the nominee and the heirs is a civil-court question of partition or accounting, decided on the pre-2015/post-2015 Section 39 axis discussed above. The cross-reference is the companion article on nominee versus legal heir (article 095), which sets out the doctrinal framework; this article is the procedural playbook.