All you need to know about assigning life insurance policy


Interest in a life insurance policy can be transferred from the policyholder to a lender or a relative by assignment of policy. Here the policyholder is known as the assignor and the person, in whose favour the policy has been assigned is called assignee.

Types of assignment
There are two types of assignment:

  • Conditional assignment: This is done when the insured wishes to pass benefits of the policy to a relative in case of early death or certain conditions. The rights of the policyholder are restored once the conditions are fulfilled.
  • Absolute assignment: This is done as a part of consideration for a loan in favour of the lender/bank/lending institution. In such an assignment, the insured loses his rights in the policy and the absolute assignee can deal with it independently.

Notice of assignment
The insured needs to either endorse the policy document or make a deed of assignment and register the same with the insurer. A form prescribed by the insurers must be filled and signed. In case of conditional assignment, reason also needs to be mentioned.

Documents needed

  • Proof of income.
  • Self attested copy of photo ID and address proof.
  • Self attested copy of PAN card.

Fees and stamp duty
If the assignment is made by endorsement on the policy document, it is exempt from the stamp duty. However, in case of a separate deed, stamp duty is payable.

If the insurance company decides to register the assignment, it will record the assignment and inform the assignor. On paying a fee, the assignee can obtain an acknowledgement.

Right to reject
The insurer has a right to reject if it believes that the assignment is not bona fide or against the interest of the policyholder or public interest or for the purpose of trading the insurance policy.