What is Policy Assignment?
Assignment is the legal transfer of ownership of your LIC policy from you (assignor) to another person or entity (assignee). After assignment, the assignee gets all or conditional rights to:
💰 Maturity proceeds
🛡️ Death benefit
🏦 Loan rights
📋 Surrender rights
Governed by Section 38 of the Insurance Act, 1938. Must be registered with LIC to be legally valid.
Absolute vs Conditional — Key Differences
| Feature | 📄 Absolute Assignment | 🔄 Conditional Assignment |
|---|
| Transfer Type | Permanent, unconditional | Temporary, with conditions |
| Reversible? | No ❌ (only if assignee transfers back) | Yes ✅ (reverts when condition met) |
| All Rights Transfer? | Yes — complete ownership | Limited — until condition fulfilled |
| Common Use | Gift, family transfer | Bank loan collateral ⭐ |
| Nominee Status | Nominee overridden ❌ | Bank has first claim, balance to nominee |
| Example | "I transfer this policy to my wife permanently" | "Bank holds rights until loan repaid" |
When is Assignment Used?
🏦 Bank Loan (Most Common)
Taking a home loan or personal loan using LIC policy as collateral. Bank requires conditional assignment. Policy reverts to you after full loan repayment. Bank has first claim on death benefit up to loan amount.
🎁 Gift to Family Member
Absolute assignment to spouse, child, or parent. The assignee becomes the full owner and can claim maturity, take loans, or surrender the policy.
⚖️ Legal Settlement
Divorce settlement, court orders, or business partnership dissolution. Assignment as part of a legal agreement — can be absolute or conditional depending on terms.
Step-by-Step Process
1
Get Assignment Form
Available at your LIC branch or downloadable from licindia.in. Specify absolute or conditional.
2
Fill in Details
Policy number, assignor details, assignee details, type of assignment, reason, and consideration (if any). For conditional, specify the condition clearly.
3
Sign & Witness
Both assignor and assignee sign. One witness required. For conditional (bank), the bank officer signs.
4
Submit Documents
- Original policy bond
- Assignment form (filled & signed)
- ID proof of assignor & assignee
- Address proof of assignee
- Stamp paper (if required by state)
✓
LIC Registers & Endorses
LIC endorses the assignment on the policy bond and updates their records. Takes approximately 7-15 working days. You receive acknowledgement.
Important Rules & Warnings
⚠️
Assignment overrides nominee. After absolute assignment, the nominee has NO claim. The assignee gets everything. Be very careful before assigning.
⚠️
Absolute assignment is irrevocable. Once done, you cannot reverse it. Only the assignee can reassign it back to you. Think carefully before absolute assignment.
ℹ️
Must register with LIC. Unregistered assignment is not valid. Always submit at the LIC branch and get acknowledgement.
ℹ️
After bank loan repaid — get the reassignment letter from the bank and submit to LIC. Otherwise your policy remains assigned to the bank even after loan closure.
💡 Expert Tip (Haresh Hirapara): Most assignment I handle is for bank loans — conditional assignment as collateral. Two critical tips: (1) Always get the reassignment letter from the bank after loan repayment and submit it to LIC — I've seen cases where families couldn't claim maturity because the assignment was still active. (2) Never do absolute assignment casually. Once done, you lose all rights permanently. If you want to gift a policy to your child, consider just changing the nominee instead — it's simpler and revocable. For any assignment-related queries, consult your LIC branch — the process involves legal rights.
Frequently Asked Questions
What is LIC policy assignment?+
Legal transfer of ownership from assignor to assignee. The assignee gets rights to maturity, death benefit, loan, and surrender. Done under Section 38 of Insurance Act. Must be registered at LIC branch to be valid.
What's the difference between absolute and conditional?+
Absolute: permanent, irrevocable, all rights transfer. Conditional: temporary, reverts when condition met (e.g., loan repaid). Banks use conditional; family gifts use absolute. Consult your LIC branch.
How to assign my policy?+
Get form from LIC branch → fill details → both parties sign → attach policy bond + ID proof → submit to branch → LIC registers (approximately 7-15 days). Keep the acknowledgement safe.
When should I assign my policy?+
Most common:
bank loan collateral (conditional). Also used for gifting to family (absolute), divorce settlements, or business obligations. See our
Loan Guide. Consult your LIC branch.
Can assignment be reversed?+
Absolute: cannot be reversed by assignor — only the assignee can reassign back. Conditional: automatically reverts when condition is met. After bank loan, get reassignment letter and submit to LIC.
Does assignment affect the nominee?+
Yes — assignment overrides nominee. After absolute assignment, nominee has no claim. For bank loan (conditional), bank has first claim up to loan amount, balance goes to nominee. See our
Nominee Guide.
⚠️ Disclaimer
This article is for educational and informational purposes only. LIC-Calculator.com is not affiliated with LIC of India. Assignment rules, process, and legal requirements are approximate based on publicly available information. The actual process may vary by branch and state laws. For official information, visit licindia.in.
This is not financial advice. Please consult your LIC branch or a legal advisor for assignment-related queries.