The correct answer is: B. Nomination is entitled to give a valid discharge to an insurer for payment of claim.
A nominee is a person who is named by the policyholder to receive the benefits of a life insurance policy in the event of the policyholder’s death. The nominee is not the owner of the policy proceeds, but they are entitled to receive the proceeds if the policyholder dies.
An assignment is a transfer of ownership of property from one person to another. In the context of life insurance, an assignment is a transfer of ownership of the policy from the policyholder to another person. If the policyholder assigns the policy to another person, the nominee will no longer be entitled to receive the benefits of the policy in the event of the policyholder’s death.
A nomination is not the same as an assignment. A nomination is a request to the insurer to pay the benefits of the policy to a specific person in the event of the policyholder’s death. An assignment is a transfer of ownership of the policy.
If a policy is assigned to the insurer for a loan, it does not cancel the existing nomination made earlier. The nominee will still be entitled to receive the benefits of the policy in the event of the policyholder’s death.
Here are some additional details about each option:
- Option A: Nominee is in every circumstance the owner of the policy proceeds. This is not always the case. The nominee is only entitled to receive the benefits of the policy if the policyholder dies. If the policyholder does not die, the nominee will not receive the benefits of the policy.
- Option B: Nomination is entitled to give a valid discharge to an insurer for payment of claim. This is correct. The nominee is entitled to receive the benefits of the policy in the event of the policyholder’s death. The insurer is required to pay the benefits to the nominee.
- Option C: Assignment and nomination are one and the same. This is not correct. An assignment is a transfer of ownership of property from one person to another. A nomination is a request to the insurer to pay the benefits of the policy to a specific person in the event of the policyholder’s death.
- Option D: Even if a policy is assigned to the insurer for a loan it cancels the existing nomination made earlier. This is not correct. If a policy is assigned to the insurer for a loan, it does not cancel the existing nomination made earlier. The nominee will still be entitled to receive the benefits of the policy in the event of the policyholder’s death.