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What is an assignment?

Assignment is a means whereby the beneficial interest,right and title under a policy gets transferred from the assignor to the assignee. 'Assignor' is the policy holder who transfers the title and 'Assignee' is the person who derives the title from the assignor.

When to assign a policy
Assignment can be made only after acquiring the policy. Assignment can be done only for consideration- for money or money's worth or good, moral and meritorious consideration like, love and affection.

Procedure to assign a policy
Assignment can be done by mere endorsement on the policy or by a separate duly stamped deed. Assignment can be done by the proposer, policy holder, or the absolute assignee.

Pre-requisites for a valid assignment
Assignor must be a major. Assignor must have an absolute right over the policy. Assignment must be in writing. Assignor's signature along with a witness is a must. Notice of assignment is to be submitted to the insurer.

Types of assignments
There are two kinds of assignments.
» Conditional Assignment
» Absolute Assignment

Conditional assignment is usually effected for consideration of natural love and affection. Absolute assignment is usually affected for valuable consideration.

The rights of an assignor and assignee
On assigning the policy, the assignor (life assured/policy holder) loses his right over the policy and the assignee gets the right and becomes the owner of the policy. The assignee can further re-assign the policy and he also has a right to sue under the policy.

A valid Assignment once made cannot be cancelled. It is only an another valid assignment the earlier assignment gets cancelled. In all the cases, Assignment automatically cancels the nomination. However, when the policy is assigned to the insurer, nomination gets affected and it does not get cancelled.

Under conditional assignment, if the conditional assignee dies,the benefit under the policy goes back to the life assured if surviving. otherwise, the benefit goes to policyholders nominee.Under absolute assignment, if the absolute assignee dies, the benefits under the policy goes to the legal heirs of the assignee.


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