Nomination under life insurance does not override succession rights where the nominee is outside the beneficiary class.

After the 2015 amendment to Section 39 of the Insurance Act, a nominee who is outside the specified class of parents, spouse and children does not become a beneficiary nominee merely by nomination. A brother named in a life insurance policy could therefore receive the policy amount only as a nominee, while the underlying entitlement remained with the legal heirs where succession rights applied. The amended scheme also indicates that receipt by the nominee does not defeat the substantive claim of heirs. On this basis, the widow and child, as Class I legal heirs, were recognised as entitled to the policy proceeds.

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Issues: Whether, after the 2015 amendment to Section 39 of the Insurance Act, 1938, a brother nominated under a life insurance policy can claim the assured amount as a beneficiary nominee and whether the insurer was bound to pay the proceeds to the widow and child, being the legal heirs.

Analysis: The amended scheme of Section 39 distinguishes between nominees who fall within the specified class of parents, spouse, children, spouse and children, and other nominees. The specified class may be treated as beneficiary nominees, while a nominee outside that class does not acquire beneficial entitlement merely by reason of nomination. Sub-section (8) also shows that the nominee's receipt of the policy amount does not alter the underlying entitlement of the legal heirs where succession rights arise. Applying this framework, the nominated brother could receive the amount from the insurer only as a nominee and not as a beneficiary entitled to exclude the legal heirs. The widow and child, being the Class I legal heirs, had the substantive claim to the policy proceeds under the governing law of succession.

Conclusion: The nomination in favour of the brother did not make him a beneficiary nominee, and the claim to the assured amount was held to belong to the widow and child. The insurer was directed to disburse the proceeds to the petitioner and her son.

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