Karnataka HC Ruling: Nominee Must Share Insurance Payout with Legal Heirs
BENGALURU: A significant ruling by the Dharwad bench of the Karnataka High Court has shed light on the obligations of nominees in insurance policies. According to the court, if the legal heirs of the insured person raise a claim, the nominee is required to share the insurance benefits.
The court’s decision revolves around the amended Section 39 of the Insurance Act, which governs nominations. Justice Anant Ramanath Hegde clarified that the amendment does not supersede existing succession laws, such as the Hindu Succession Act of 1956. He emphasized, “Under the unamended provision, the nominee had an obligation to distribute benefits flowing from the policy to the legal heirs.”
Case Background
The case in question involved Ravi Somanakatti, who had taken out two life insurance policies worth Rs 19 lakh and Rs 2 lakh, nominating his mother as the beneficiary. Following Ravi’s untimely death on December 20, 2019, his wife and minor son filed a lawsuit against his mother, Neelavva, claiming a share of the insurance benefits.
The trial court ruled that all parties—Ravi’s mother, wife, and son—were entitled to a one-third share of the insurance payouts. Neelavva challenged this verdict in the High Court, which subsequently upheld the trial court’s decision.
Understanding Your Rights
This ruling emphasizes the importance of understanding both insurance policies and succession laws. It is advisable for policyholders to revisit their nominations, especially after significant life events such as marriage or the birth of children.
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