Karnataka HC Clarifies Nominee Rights Over Insurance Claims

The Karnataka High Court ruled that insurance policy nominees do not have absolute rights over benefits if legal heirs assert claims. In the case of a deceased man's insurance policy, the court upheld that the benefits be divided among his mother, wife, and child, aligning with personal succession laws.

In a pivotal decision, the Karnataka High Court determined that insurance policy nominees do not wield absolute power over benefit claims when the legal heirs of the policyholder stake a claim. This clarification underscores that Section 39 of the Insurance Act, 1938, does not supersede personal succession laws such as those outlined in the Hindu Succession Act, 1956.

The ruling emerged from the high-profile case of Neelavva @ Neelamma vs. Chandravva @ Chandrakala @ Hema and Others, which focused on competing claims over an insurance payout. Justice Anant Ramanath Hegde's verdict was that nominees could only claim insurance benefits in the absence of assertions from legal heirs, reaffirming the primacy of succession laws over nominee claims.

The case involved a complex legal battle between a deceased man's mother and wife over insurance proceeds, leading to a trial court's decision to equally distribute benefits among the mother, wife, and child, a ruling that the High Court upheld. Justice Hegde criticized the legal ambiguities surrounding nominations and called for clearer legislative drafting to prevent legal confusion.

(With inputs from agencies.)