Information Page On Difference Between Assignment Vs Nomination In Life Insurance

Difference between nomination and assignment 

In life insurance products, two terms assignment and nomination are frequently used. While not many may understand them, it is imperative to know the meaning and the difference between assignment and nomination before purchasing any insurance plan. 

The primary difference is about policy ownership. While in nomination, the policy owner remains unchanged. However, in an assignment, the policy ownership is transferred from one person to another. The nominee (as in nomination) gets the benefit after the death of the life assured but the assignee (as in assignment) gets the benefits when the life assured transfers the rights and ownership of his/her policy to the assignee. These are some of the basic and common differences between nomination and assignment. 

Let us learn some more about assignment and nomination, and what role they play in insurance. 

What is nomination in life insurance? 

Nomination is one of the most essential processes of the life insurance policy. The policyholder has to make any one family member his/her nominee. The nominee is considered eligible to claim the benefits of the life insurance policy if the insured individual dies. In this way, the insurance company ensures that the family of the insured does not have to suffer financial problems even after an earning member of the family passes away. Hence, the policyholder should choose the nominee of his/her insurance policy carefully.

Types of nominees in life insurance 

The policyholder gets the choice of choosing one among the five types of nominees. Let’s understand them in detail. Here are the following five types of nominees in life insurance: 

  1. Beneficial Nominee

    IRDA has introduced a new term ‘beneficiary nominee’ instead of the nominee. It means that the policyholder has the right to make anyone his/her nominee. The nominee can be the policyholder’s parent/ guardian, child, or companion. If the policyholder has already chosen his/her nominee, then no dispute will arise in getting the claim.

  2. Minor Nominee

    The policyholder can make his/her minor child the nominee of his/her life insurance policy to secure the child’s future in his/her absence. But if the insured individual dies untimely, the amount of the claim will be payable to the legal custodian or the appointee of the child. The child’s custodian hands over that money to the child when he/she turns 18 years old.

  3. Non-Family Nominee

    It is also possible for the policyholder to choose a non-family member as his/her nominee. However, this is generally not recommended.

  4. Multiple Nominees

    Two or more two persons can be chosen by the policyholder under the multiple nominees of the insurance policy. In this case, the policyholder divides the share of the total amount between the two nominees. If the policyholder doesn’t divide the amount while filling the nomination form, then, the amount of the claim is divided equally between the nominees by the insurer.

  5. Changing Nominee

    Under this type of nominee, the policyholder is able to choose his/her nominee during the life insurance policy tenure.

  6. Successive Nominee

    Under many circumstances, people prefer choosing more than 1 nominee, in successive nominations, one can choose up to three nominees. After the death of the insured, the 1st nominee will receive the death benefit. In case the 1st nominee is also dead, the death benefit will go to the 2nd nominee and so on. 

Important things to know about nominations 

There are a few quintessential things about the nominations that every policyholder must keep in mind. The important things that should be known about nominations are given below: 

  • The life assured and the policyholder should be the same in the life insurance policy for the process of nomination. If they are two different persons, then, the claim benefits will be taken by the policyholder of the insurance plan.
  • The nominee has no right to request any kind of change in the insurance policy.

What is an assignment in life insurance?

Under Section 38 of the Insurance Act, 1938, there is a provision for assignment in life insurance. The policyholder transfers the rights of his/her policyholder to another person. The person who transfers the insurance rights is called the assignor and the person to whom the policy rights are transferred is called the assignee. In this way, the assignee becomes the owner of the insurance policy. 

Generally, the people choose banks for assigning their policy rights. The bank becomes the policyholder but the life assured of the insurance policy is not changed. The benefits of the claim are received by the bank (policyholder). 

Types of assignment in life insurance 

There are two types of assignment in life insurance i.e. Absolute Assignment and Conditional Assignment.

  1. Absolute Assignment

    In the absolute assignment, the rights of the life insurance policy are given to another person (assignee) without any terms and conditions. Generally, this type of assignment is done by the policyholders to show love for someone or to repay the bank loan.

  2. Conditional Assignment

    In a conditional assignment, the policyholder (assignor) transfers the rights of the life insurance policy to another person (assignee) under certain terms and conditions. If the terms and conditions are fulfilled, only then, the ownership of the policy will be transferred. 

Important things to know about assignments:

Check out the essential things about the assignment that you must not forget to keep in mind:

  1. Only the owner of the policy is changed in the assignment. The life assured will remain the same
  2. The policyholder of each insurance plan can transfer the rights of the insurance policy to the assignee. Only the pension plan and the insurance plans that are bought under the Married Women’s Property Act (MWP) are excluded
  3. The nomination of the insurance policy is cancelled if the policyholder gives the rights of his/her insurance policy to the insurance company for paying the insurance company’s loan.

Differences between nominations and assignments:

The table given below gives you a quick insight into the several differences between nominations and assignments.





The insured transfers the rights of his/her insurance policy to the assignee (person/entity) with or without terms and conditions.

The insured chooses the nominee for his/her life insurance policy benefits.

Policy Rights

The assignee gets the complete rights of the insurance policy. He/she can transfer the policy rights to the third person as well.

The nominee has no right over the insurance policy of the insured.

Claim Benefits

The claim benefits are enjoyed by the assignee of the life insurance policy if the insured dies. The assignee becomes the nominee of the insurance plan.

The claim benefits are enjoyed by the chosen nominee. The nominee can be changed by the insured during the policy tenure.

Maturity Benefits

When the insurance policy gets matured, all the benefits are directly enjoyed by the assignee of that policy.

No maturity benefits are enjoyed by the nominee if the policyholder is alive till the end of the policy tenure.

Legal endorsement

Assignment is a legal endorsement. It needs to be changed only as an endorsement on the original policy bond by the insurer.

There is no legal endorsement of a nomination. It can be changed by a simple email or a letter.


There is the requirement of witnesses.

There is no requirement for the witness when the insured chooses the nominee for his/her life insurance policy. If the nominee is a minor, an appointee would be required for the same.


It is very important for the policyholder to know about assignment and nomination. This is because the nomination and assignment have their own benefits that the policyholder can enjoy without any ado. Therefore, a piece of complete information has been shared with the help of this article. It is recommended to the policyholder to choose the right life insurance policy that can serve their family members even in their absence.


  1. What is the meaning of endorsement in the assignment?

    The policyholder has to sign the endorsement while transferring the rights of his/her insurance policy to the assignee. The sign of one witness is also required. Thereafter, the policyholder (assignor) has to mention precisely the reasons for transferring the rights of the insurance policy. The terms and conditions are also mentioned in the form (if any). Furthermore, the details of the assignee are also included in the form. 

  2. What are the liabilities and rights of the assignee?

    The liabilities and rights of the assignee are different on the basis of the types of assignment. In the absolute assignment, the right of policy ownership, responsibility to pay future insurance premiums, and the right of getting maturity benefits are transferred to the assignee. But in the conditional assignment, these rights and liabilities are determined as per the terms and conditions. 

  3. When does the insurance company cancel the nomination in the assignment process?

    When the assignor assigns the rights of the insurance policy to the assignee, then the nomination is cancelled by the insurance company. The nomination is not cancelled if the assignment is temporary. In that case, the rights of the insurance policy will be given back to the insured when he/she will pay the loan. 

  4. Who can become the assignee of my insurance policy?

    The assignee of the insurance policy can be a person or a financial institution. There should be an insurable interest between you and the person/financial institution. The assignee is either temporary or permanent. In some cases, the insured chooses the financial institution or insurance company as the assignee on some terms and conditions. But after some time, when the loan is paid, the insured will become the owner of the insurance policy again.

  5. When does the insurance company accept the assignment?

    If the insurance company finds that there is an insurable interest between the assignor and assignee, then the assignment is accepted. The insurance company makes sure that the assignment is not against the public interest and also not for trading purposes. The assignment should be in the interest of the policyholder only.


This article is issued in the general public interest and is for educational purposes only. The blogs should not be used as a substitute for competent expert advice from a licensed professional to best suit your needs. Insurance is a subject matter of solicitation. For more details on policy terms, conditions, exclusions, limitations, please refer/read policy brochure before concluding sale.

What Is General Provident Fund (GPF): Know How it works & Benefits

The provident funds allow residents to save funds for retirement with monthly deposits and calculated interest. There are three provident funds, namely, the general provident fund (GPF), the public provident fund (PPF) and the employee’s provident fund (EPF). All the three funds vary in their policies, eligibility, terms and conditions.

General Provident Fund or GPF is a type of provident fund. It’s basically a retirement saving scheme to help Indian government employees to save funds for their retirement. Non-government employees cannot contribute to this scheme.

This article will focus on the general provident fund, its features, benefits, eligibility, and procedures.

What is GPF?

GPF is a savings plus retirement scheme for the government employees of India. All the government employees working at different sectors and levels are eligible to benefit from this scheme. They can contribute a certain amount of funds from their salary monthly. 

The policy allows employees to save funds on a monthly basis and accumulate the funds and their interest for their retirement. Thus, providing financial security at their elderly age. 

These funds are secured and risk-free due to the government’s backup. GPF also provides tax deductions under Section 80 of the Income-tax Act. Furthermore, the interests earned from the GPF provident funds are tax-free.

The interest rate of the General Provident Fund

The interest rates of the GPF are regularly updated by the Department of Pension and Pensioners’ Welfare of India. Ever since its launch in 1968 the Ministry of Finance has regularly updated the interest rates according to the financial needs. 

  • All sectors of government employees receive the same interest rate
  • The interest rate for GPF for the financial year 2021-22 is 7.1%. It is reported that for the last 15 years the interest rates are fluctuating between 8%-7%.

General Provident Fund Features 

  • GPF Provident Fund is operated by the Department of Pension and Pensioners Welfare. This department is transparently managed by the Ministry of Personnel, Public Grievances, and Pensions.
  • All the government employees including temporary (after offering one year’s service), and permanent are eligible to subscribe to the GPF Provident Fund.
  • The subscriber of the GPF Provident Fund is required to make his/her family member nominee while filling the prescribed form of the fund. The subscriber can make one or more persons the nominee of his/her fund. The subscriber also decides the share of the payable amount between the nominees after his/her demise.
  • The subscribers of the GPF Fund get the interest of 7.1% on their deposited money.
  • On their last working day in the government office, the money from the GPF fund is transferred into the account of the subscriber.

Eligibility criteria for GPF:

The eligibility criteria to subscribe to the GPF Fund are given below:

  • The government employee should be a citizen of India.
  • After offering one year’s service in the public sector, temporary government employees including apprentices and probationers are eligible to subscribe to the GPF fund.
  • The employees of the private sector companies are not eligible for the GPF Provident Fund.
  • The government employees need to deposit a certain share of their salary to subscribe to the GPF Provident Fund. 

Steps to open a GPF Account:

The following steps are taken while opening the GPF account:

Step 1: 

Firstly, the eligible government employee needs to fulfil the form for GPF Fund.

Step 2: 

Then, that application form is submitted to the Account General of the state.

Step 3: 

After approval, an account number is provided to the subscriber.

Step 4: 

Thereafter, the procedure of monthly deduction from the subscriber’s salary is specified. The deducted amount is made to the DDO (Drawing and Disbursing Officer).

Step 5: 

At the end of the financial year, the subscriber is provided with the annual statement of the GPF fund including credits, debits (loan), accumulated interest (7.1 % interest rate), and closing balance. 

The withdrawal process of the General Provident Fund

Some key points to understand the withdrawal process of the GPF Provident Fund are given below: 

  • GPF funds mature when the government employee is retired. On the last day of work, the accumulated amount of the fund is credited into his/her bank account.
  • If the government employee has completed ten years of service in the public sector, then he/she can withdraw the accumulated GPF fund on account of various reasons i.e. marriage. education, medical treatment, construction, purchasing of the consumer durables, travelling expenses, etc. He/she can also withdraw the GPF fund amount within ten years before the date of retirement/superannuation.
  • If the government employee is leaving the job before retirement, then he/she is eligible to withdraw the amount from the GPF Provident Fund.
  • In case of the demise of the subscriber, the accumulated money of the GPF fund is claimed by his/her nominee. 

Difference between EPF, PPF & GPF

Even though EPF, PPF, and GPF all belong to the Provident fund category. They still differ in many aspects. Understanding these differences will enable you to choose the appropriate fund scheme that suits you and your lifestyle.

Here is a tabulation of the differences between these three provident funds.






Employees’ Provident Fund

Public Provident Fund

General Provident Fund

Eligibility criteria

People working in any company that has 20 or more employees

Include all the Indian resident individuals

Only Government employees and workers.

Interest rates




Maturity period

Up to 58 years of age

15 year period

Until retirement

Minimum Deposit range

10% or 12% of the salary or INR 1800

INR 500 per year

6% of their monthly salary

Maximum Deposit range

Its voluntary no completion is made

INR 1.5 lakhs per year

100% of their monthly salary

Premature closure

Being unemployed for more than 2 months

Only after 5 years of maturity, for educational and medical reasons

If the individual leaves their government job

Contribution amount of GPF

For the regular flow of contribution to the GPF provident fund the Ministry of finance has regulated a certain percentage of income to be allocated towards the fund. The Monthly contribution of the government employees is based on their salaries.

  • The minimum monthly contribution should be 6% of the monthly salary of the employee
  • The maximum monthly contribution is voluntary and can be even up to 100% of their salary.

Advances of GPF Provident Funds

GPF provident funds allow their subscribers to take advances from the accumulated funds. Let’s look into the provisions for advances of GPF and their rulings.

  1. The GPF subscriber can request an advance of their funds at any point in their career under certain grounds like medical needs, marriages, education and housing.
  2. The advances provided are generally around 12 months of funds or three-fourths of the accumulated funds, whichever value is less. However, under special conditions, even 90% of funds are also provided as advances.
  3. The sanctioning authority must pay the funds to the subscriber within 15 days from the request. No proof documents or procedures are required while applying for advances.
  4. The advance provided is expected to be refunded within 60 months of instalments. One can take multiple advances during their career. No interest shall apply to these advances.
  5. If the subscriber needs more advances with incomplete refunding of the previous advances, then the leftover funds are added to the new advance and the subscriber must pay the consolidated funds.

Government employees can do the savings easily with the help of the GPF fund. These savings help one day when the regular salary is not received after retirement. GPF fund helps the employees if they need money during their government service period for various purposes i.e. education of the child, marriage, renovation/construction of the house, travelling expenses, medical expenses, etc. Hence, those who want to have a safe and secure future should subscribe to the GPF provident fund. 


  1. How much of my salary will be deducted under GPF?

    The minimum deductible value is 6% of the government employee’s monthly salary. However, the subscriber can contribute more if they want.

  2. Are the funds under GPF taxable?

    GPF allows tax deduction under Section 80. No additional taxes are required to be paid over the interest amount that accumulates over the funds.

  3. Can I borrow money against GPF?

    You can request up to 75% of the advances from your GPF. No interests are calculated over these loans.

  4. What if I quit my job in between, what happens to my funds?

    When the subscriber quits their job they can withdraw the funds from GPF regardless of their career period. No additional charges or deductions are made over these premature withdrawals.


This article is issued in the general public interest and is for educational purposes only. The blogs should not be used as a substitute for competent expert advice from a licensed professional to best suit your needs. Insurance is a subject matter of solicitation. For more details on policy terms, conditions, exclusions, limitations, please refer/read policy brochure before concluding sale.

10 Myths Revolving Around Life Insurance That Need To Be Debunked

Life insurance is an important decision, it is one of the easily accessible risk management tools for an individual. However, this is one of the areas which has minimal knowledge, there are numerous myths surrounding life insurance and how it works. This has led to a lower number of people insuring their life, they do not understand the power of hedging their life risks and leading stress-free life. Here we go on to bust the most popular myths about life insurance policies.

  1. Myth: The utility of life insurance kicks in only after death

    This is by far the most popular myth, typically the premiums that are paid towards life insurance are to hedge your life risk, they are not intended to provide any returns. This is often construed as an expense or cash outflow which will result in no returns.

    The death benefit is the only return that comes in only upon the insured’s death. The important aspect that people miss understanding is that life insurance takes away a certain burden off your shoulder, and in the event of your eventuality, your loved ones will not be left to fend off financial woes.

    Life insurance should be seen as a hedge against life risk and a reliever of your psychological stress.

  2. Myth: Coverage under group term insurance will suffice

    Group term insurance is a common, standard and basic cover offered uniformly for all the employees who fall within a specific rank. It does not offer a hedge against specific items.

    Insurance of any kind should be customised to your needs. In addition to the group insurance, it is suggested that you opt for individual insurance with relevant add-ons aligned to your financial goals and needs. This will ensure that you have a comprehensive cover and during periods of job transition and job loss, you will still stay covered. 

  3. Myth: Young and healthy; why do I need life insurance?

    During the pandemic, many young and healthy individuals succumbed to a viral infection. It is time that you burst your bubble because you are never too young or healthy to avail life insurance. Infact, buying when you’re younger and healthier will also save you money long-term. 

  4. Myth: Life insurance premiums are very expensive

    Term insurance is one of the cheapest forms of life insurance, a 30-year-old can avail of term cover for Rs. 1 crore at less than Rs. 700 per month. The cost is less than a bill that you will foot when you eat out. 

  5. Myth: I have a pre-existing illness, and I am not eligible for life insurance

    If you have a pre-existing illness, you will have to declare the same. In all probability, you will undergo a medical examination. Based on the results, the insurer will provide life insurance at a higher than usual premium. 

  6. Myth: I am too old for life insurance

    There are many life insurance plans which are specifically designed for senior citizens, the age of entry is up to 80 years in many of the plans. The premiums would be expensive for life insurance when you avail of it at a later stage in life. It is advised that you avail yourself of life insurance at a young age for the maximum term. 

  7. Myth: If the premium amount were to be invested in other investment avenues, it would yield better returns

    This is not how one should look at life insurance as it is a means to hedge your risk. While attempting comprehensive financial planning, hedging your life risk and health risk are the first steps that you will undertake. The amount in excess of these commitments net off your EMIs and household requirements will be allocated for investments. The only alternative approach to this mindset is to use dual benefit plans such as ULIPs which will offer you the required life insurance and yield returns. 

  8. Myth: Combining investments with insurance is a bad idea

    Another myth that dwells is the polar opposite of the previous one, the people who fall prey to this myth think that only pure life insurance is a viable option for hedging life risk. Although you may choose to do so, there is absolutely nothing wrong with clubbing your financial goals alongside your life insurance requirement.

    For example, you can avail a child plan for planning your child’s education, by availing of life insurance alongside, you also ensure that the death benefit enables your child to fulfil his / her dream even in the unfortunate event of your eventuality. 

  9. Myth: Only the person paying the premium can be the insured

    This is a nuance that people tend to miss, you can avail of a life insurance plan on any other related individual. The person paying the premium and the policyholder or insured can be two different individuals. There are scenarios when one spouse undertakes the commitment towards premium payment while getting their partner insured. 

  10. Myth: Claim settlement from insurance is a hassle, instead just keep the money safe in the bank

    Claim settlement has become quite seamless in today’s time this is one competitive aspect which becomes a determinant for availing of a policy. Many insurers have a very high claim settlement rate. Typically, one should not be looking at companies with a lower than 95% claim settlement rate whilst availing of a life insurance policy. 

  11. These are only some of the myths surrounding life insurance, but they are significant ones. Hope they have provided you with some insights on life insurance. Get in touch with Turtlemint Advisors who will ensure that you’re getting the right policy with the accurate information – you need.

    This article is issued in the general public interest and is for educational purposes only. The blogs should not be used as a substitute for competent expert advice from a licensed professional to best suit your needs.