LAHORE: The nominees of policyholders under various insurance policies are found to be depriving the legal heirs of a diseased policy holder the fruits of the policy, said sources.
On the other hand, the nominee’s role is to collect the proceeds of the policy as a trustee and then distribute it among the legal heirs of the insured person, they added.
According to the sources, the nominees of policyholders, in connivance with the policy issuers, used to commit fraud by collecting all the proceeds while sharing the fruits with insurance agents than the legal heirs of a deceased policyholder.
They said such frauds are rampant in cases where the policyholder has had secret marriage during his life and nominated his spouse as a nominee of a policy.
Every insurance policy empowers the policyholder, when affecting the policy or at any time before the policy matures for payment, to nominate a person or persons as the beneficiary of the policy to whom the money secured by the policy shall be paid in the event of the insured person’s death.
The sources from the office of the Federal Insurance Ombudsman (FIO) have pointed out that several disputes fall within the territory of the FIO now and then, challenging the withdrawal of matured amounts by nominees of the policyholder secretly and depriving them of their right as legal heirs. But still, they said, many legal heirs cannot get their rights because of their ignorance of the policy and the connivance of the nominees with the insurance agents.
As per the legal status, the sources said, the nominee is only entitled to collect the policy proceeds as trustee for the benefit of all the legal heirs entitled to inheritance and cannot deprive the legal heirs of the nominator to inheritance of the assets of the deceased under the law of succession applicable to the deceased.
They said the fraudulent elements take the cover of a plea that the amount of group insurance, benevolent fund and the provident fund does not fall under the definition of the assets of a deceased person.
They said the fraudsters managed to get benefits even though a deceased policyholder was entitled to the benevolent fund and group insurance during his lifetime and on his death.
According to the sources, the purpose behind the concept of nomination is to facilitate the process of disbursement of the amount left behind by the deceased among the legal heirs. No nominee can claim the amount to the exclusion of other legal heirs, they stressed.
They further maintained that the status of a nominee is that of a trustee. A bank, financial institution or corporation is supposed only to entertain the claim of a nominee by ascertaining who else besides the nominee is entitled to the disputed claim.
Copyright Business Recorder, 2023
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