The insurance policies in India are fully tradeable and freely assignable in accordance with the provisions of Section 38 of the Insurance Act, 1938. Section provides that a life insurance policy is freely transferable or assignable with or without any consideration. However, for valid transfer or assignment the same shall be duly endorsed on the policy or a separate instrument can also be formed. The transferor or the assignor or his duly authorized agent and at least one witness must sign the same for valid transfer or assignment. It is pertinent to note that the fact of transfer or assignment must be set forth.
Sub-section 2 of Section 38 further provides that a notice in writing of the transfer or assignment and either the said endorsement or instrument itself or a copy thereof certified to be correct by both transferor and transferee or their duly authorized agents must be deliver to the insurer.
The Hon’ble High Court of Bombay in Insure Policy Plus Services (India) Pvt. Ltd vs. The Life Insurance Corporation Of India 2007 (109) Bom L R 559, 2007 79 SCL 583 Bom has held that life insurance policies are transferable and assignable in accordance with the provisions of the Insurance Act, 1938 and in terms of the contract of life insurance.
