Nominee vs Legal Heir: What the Karnataka High Court’s 2025 Ruling Means for Your Insurance Benefits and Why You Still Need a Will

In a landmark judgment that could affect millions of Indian families, the Karnataka High Court in Neelavva @ Neelamma v. Chandravva & Others (2025) clarified a long-standing confusion: a nominee under an insurance policy is not the owner of the policy amount — legal heirs still have a right to claim their share under succession law.

This ruling reinforces one powerful message — nomination alone is not enough. You need a Will.

Background of the Case

Sri. Ravi Somanakatti had taken out two life insurance policies totaling ₹21 lakhs, naming his mother as the nominee. At the time, he was unmarried. Later, he got married and had a son — but did not update the nomination.

When Ravi tragically passed away in December 2019, a dispute arose between his widow and minor son on one side and his mother (the nominee) on the other. The mother claimed she was the sole beneficiary. The widow and child claimed their rightful share as Class-I legal heirs under Hindu Succession Law.

The trial court awarded equal one-third shares to each party. The mother challenged this in appeal, arguing that the amended Section 39 of the Insurance Act (2015) made her the sole beneficiary.

High Court’s Observations: Insurance Does Not Override Succession

Justice Anant Ramnath Hegde dismissed the mother’s appeal, making some key observations:

• Parliament did not adopt the Law Commission’s suggestion to create a distinction between a "beneficiary nominee" and a "collector nominee."

• Insurance and succession fall under separate constitutional domains; one cannot override the other.

• The term "beneficial title" in Section 39(8) applies only when legal heirs make no claim. If heirs come forward, succession law takes precedence.

• The purpose of insurance is to provide financial support to dependents — not just the nominee.

In simple terms, a nominee is only a trustee or custodian — not the legal heir.

What Is Section 39 of the Insurance Act, 1938?

Section 39 allows the policyholder to nominate someone to receive the policy amount upon death. Some important points include:

• Nomination can be changed or canceled anytime before maturity.

• The nominee is entitled to receive the insurance proceeds but does not become the legal heir by default.

• If legal heirs claim the proceeds, the nominee must distribute them according to personal succession laws, unless a valid Will specifies otherwise.

Why This Matters to You

This ruling underscores a crucial legal truth:

Nomination does not equal inheritance.

Even if your spouse or parent is a nominee, they may have to share the insurance proceeds with other legal heirs unless you clearly state your wishes in a Will.

Take Control: Write Your Will with AasaanWill

Don’t leave your family’s future to courtroom battles and unclear laws.

At AasaanWill, we help you create a legally valid, affordable, and simple Will that protects your family and your intent. With a Will, you can:

• Ensure your spouse and children are protected.

• Specify how your insurance, property, and digital assets are to be distributed.

• Avoid conflicts and confusion among loved ones.

Key Takeaways

• A nominee is not the final owner of your insurance policy proceeds.

• Legal heirs can claim their rightful share unless a Will overrides it.

• Writing a Will is the most reliable way to ensure your wishes are followed.

Start your Will with AasaanWill today — and give your loved ones the clarity they deserve.