Policyholder Rights of Assignment,Nomination and Transfer MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Policyholder Rights of Assignment,Nomination and Transfer, a fundamental topic in the field of IC 14 Regulations of Insurance Business. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Policyholder Rights of Assignment,Nomination and Transfer MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Policyholder Rights of Assignment,Nomination and Transfer MCQs | Page 2 of 11

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Q11.
According to sub-section (3) of Section 38, how is the priority of claims determined in the case of multiple instruments of transfer or assignment?

a.

By the date of policy issuance

b.

By the date on which the notices referred to in sub-section (2) are delivered to the insurer

c.

By the order in which the instruments of transfer or assignment are executed

d.

By the date of policy termination

Discuss
Answer: (b).By the date on which the notices referred to in sub-section (2) are delivered to the insurer Explanation:According to sub-section (3) of Section 38, the priority of claims in the case of multiple instruments of transfer or assignment is determined by the order in which the notices referred to in sub-section (2) are delivered to the insurer.
Q12.
What action must the insurer take upon receiving the notice referred to in sub-section (2) of Section 38, according to sub-section (4)?

a.

Record the assignment or transfer in their internal records

b.

Issue a written acknowledgment of the receipt of the notice

c.

Send a confirmation letter to the policyholder

d.

Inform the regulatory authorities

Discuss
Answer: (b).Issue a written acknowledgment of the receipt of the notice Explanation:Upon receiving the notice referred to in sub-section (2) of Section 38, the insurer must issue a written acknowledgment of the receipt of the notice, as stated in sub-section (4).
Q13.
From when does the insurer recognize the transferee or assignee named in the notice as the only person entitled to benefit under the policy, according to sub-section (5) of Section 38?

a.

From the date of policy issuance

b.

From the date of premium payment

c.

From the date of receipt of the notice referred to in sub-section (2)

d.

From the date of policy termination

Discuss
Answer: (c).From the date of receipt of the notice referred to in sub-section (2) Explanation:According to sub-section (5) of Section 38, the insurer recognizes the transferee or assignee named in the notice as the only person entitled to benefit under the policy from the date of receipt of the notice referred to in sub-section (2).
Q14.
What is the effect of earlier assignments on the rights and remedies of an assignee or transferee, according to sub-section (6) of Section 38?

a.

They are rendered invalid

b.

They remain unaffected

c.

They become subject to additional liabilities

d.

They require reconfirmation from the insurer

Discuss
Answer: (b).They remain unaffected Explanation:Sub-section (6) of Section 38 states that the rights and remedies of an assignee or transferee of a policy of insurance under an assignment or transfer effected prior to the commencement of the Act shall not be affected by the provisions of this Section.
Q15.
What is the difference between a nominee under Section 39 and an assignee under Section 38 of the Insurance Act 1938?

a.

A nominee has limited rights under the policy, while an assignee has all rights under the policy.

b.

A nominee can only receive policy moneys, while an assignee can deal with the policy in any way without the consent of the assignor.

c.

A nominee cannot be a minor, while an assignee can be anybody including a minor.

d.

A nominee can further assign the policy to another person, while an assignee cannot.

Discuss
Answer: (a).A nominee has limited rights under the policy, while an assignee has all rights under the policy. Explanation:Unlike a nominee under Section 39, an assignee under Section 38 has all rights under the policy, not only to receive the policy moneys but also to deal with the policy in any way without the consent of the assignor.
Q16.
Who can be an assignee under a policy of life insurance?

a.

Only the policyholder

b.

Only a minor

c.

Anybody, including a minor

d.

Only the legal successors of the policyholder

Discuss
Answer: (c).Anybody, including a minor Explanation:An assignee under a policy of life insurance can be anybody, including a minor.
Q17.
When does an assignment of a policy of life insurance become effective against the insurer?

a.

When it is endorsed on the back of the policy

b.

When it is done on a separate stamp deed

c.

When it is signed by the assignor and witnessed

d.

When it is registered by the insurer in their records

Discuss
Answer: (d).When it is registered by the insurer in their records Explanation:An assignment becomes effective against the insurer only if it is registered by the insurer in their records.
Q18.
Under what circumstances may an assignment without consideration be considered invalid?

a.

Assignments without consideration are always valid

b.

Assignments for natural love and affection between parties standing in the near relation to each other are valid

c.

Assignments without consideration are never valid

d.

Absence of consideration may render the assignment invalid

Discuss
Answer: (d).Absence of consideration may render the assignment invalid Explanation:While an assignment can be made with or without consideration, absence of consideration may render the assignment invalid.
Q19.
What is the main difference between absolute and conditional assignments under the Act?

a.

An absolute assignment transfers only some rights of the assignor, while a conditional assignment transfers all rights.

b.

An absolute assignment creates an immediate vested interest, while a conditional assignment creates a contingent interest.

c.

An absolute assignment is revocable, while a conditional assignment is irrevocable.

d.

An absolute assignment vests the policy in the assignor, while a conditional assignment vests the policy in the assignee.

Discuss
Answer: (b).An absolute assignment creates an immediate vested interest, while a conditional assignment creates a contingent interest. Explanation:An absolute assignment transfers all rights, title, and interest of the assignor in the policy, while a conditional assignment creates an immediate vested interest but is liable to be divested on the happening of specified contingencies.
Q20.
What is the insurer's task in settling a death claim under a life insurance policy when there is a subsisting, effective nomination or assignment?

a.

The insurer can settle the claim only in favor of the legal heirs to the estate of the deceased life insured.

b.

The insurer can settle the claim only in favor of the nominee mentioned in the policy.

c.

The insurer can settle the claim directly with the assignor.

d.

The insurer can settle the claim only in favor of the assignee mentioned in the policy.

Discuss
Answer: (a).The insurer can settle the claim only in favor of the legal heirs to the estate of the deceased life insured. Explanation:If there is a subsisting, effective nomination or assignment, the insurer can settle the claim only in favor of the legal heirs to the estate of the deceased life insured.
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