Page 40 - IC24 LEGAL ASPECTS OF LIFE ASSURANCE

original assignor from the assignee.

For example, Vijay has a life insurance policy of Rs 20 lakh and

he wants to get a loan of Rs 20 lakh from the bank. So, Vijay

(assignor) can do conditional assignment of the policy under

which he will assign the policy to the bank basis the condition

that all the rights, benefits of the policy will stay with the bank

(assignee) till the time Vjay has an outstanding loan amount. In

case Vijay fails to pay the loan, the bank can recover the

outstanding amount by surrendering the life insurance policy.

If Vijay is able to pay back the loan amount to the bank then the

bank will reassign the life insurance policy back to Vijay. If Vijay

dies before paying the loan to the bank, then the bank will get

the death benefit and no family member of Vijay will have any

right over the policy. In case benefit received under the policy is

Rs 20 lakh and outstanding loan is for Rs 10 lakh, the insurance