Assignment is a means whereby the right and title under a policy gets transferred from assignor to assignee. Assignor is the policyholder who transfers the title and assignee is the person who gets the title of the policy from the assignor. Assignment can be made either by endorsement on the policy or on a separate paper duly stamped. Assignor must be a major.

Assignment must be in writing and assignor’s signature along with a witness is required. Notice of assignment should be submitted to the insurer by the assignor. Assignment can be of two types:

  • Absolute Assignment: In which all the rights, title and interest of the assignor in the policy passes on to the assignee without the possibility of cancellation of the same.
  • Conditional Assignment: In which the assignor and the assignee may agree that in case specified event or events happen, the assignment would be cancelled or ineffective in part or as a whole.

Impact of assignment

In assignment, assignor gives all the rights over the policy to the assignee that becomes the owner of the policy. The assignee has the right to reassign that policy. In the event of death of the assignee, if the assignment is conditional assignment and the assignee dies, the assignment becomes ineffective and all the rights and title of the policy goes back to the life assured if he is alive. If the life assured is not surviving, the benefit goes back to the life assureds’ nominee. In case of absolute assignment, if the assignee dies, all the rights entitled of the policy are given to legal heirs of the assignee.

Cancellation of assignment

An assignment once executed cannot be cancelled, however, if an assignee during the term of the policy reassigns the interest and title of the policy to the previous assignor such reassignment will result in cancellation of assignment and the benefits of the policy go back to the original assignor.

Procedures of Assignment

A standard form of Assignment is issued to the policyholder who wants to effect an assignment of his policy. Necessary instructions are there for executing the assignment which is then registered by the insurance company.

Points to be considered by the insurance company for affecting assignment:
  • Check whether the assignment is executed on the Policy or on a separate paper and if it is executed on a separate paper that the paper is adequately stamped. If it is unstamped or inadequately stamped inform the assignor and get it corrected.
  • Check whether notice of assignment is received from the assignor; if the notice is not received or it is defective, inform the assignor.
  • Check the signatures of assignor affixed to the assignment and notice with the specimen of his signature in the proposal papers to see that they tally.
  • If the assignment is executed on a separate paper, ensure that the paper should be stamped, in accordance with the stamp regulations.
  • Check that the date and place of execution on Assignment are mentioned.