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IRDA against LIC's move to nominate

IRDA against LIC's move to nominate "stranger" nominees

Apnainsurance.com Research Bureau

24 Jul 2008

The Insurance Regulatory Development Authority (IRDA) is planning to issue notice to Life Insurance Corporation of India (LIC) to stop its practice of allowing policy-holders to nominate "strangers" (i.e. those who are not close relatives) and religious institutions as beneficiaries of their life insurance policies.

"Stranger" beneficiaries here could mean orphans, orphanages, distant relatives, family friends. And/or people who are loyal and close to the policy-holder.

LIC changed its nominee forms to allow for this facility as many policy-holders requested permission to nominate those who were not immediate family members or religious institutions.

According to a senior industry representative, this change in nominee rules could prove to be a threat to the policy-holder's life as well as create opportunities for money laundering.