Navigating a Family Dispute Over Insurance Claims After an Employee's Passing: What Should We Do?

Dear All,

One of our employees passed away after a terminal illness, and he has not mentioned a nominee for the same.

He is married and has a 1-year-old daughter. His father is retired and has 2 more sons who are well settled.

Please note: this is a Muslim family (Sunni).

The deceased employee had mentioned his wife as the nominee in the PF form, and hence that is clear with no issues on that front.

The problem arises as his father wants the GTLI claim to be split into 4 parts. He has submitted the legal heir claim certificate naming the father, mother, daughter-in-law, and the grandchild. The spouse of the deceased employee is currently staying with her family and not her in-laws. She wants the entire claim to be paid to her as she has to take care of the child, and also, she is not from a well-to-do family.

The insurance company is clear that they will pay it to whomever we instruct them to, as this is a Group policy taken by the Organization.

The question at hand is, can we make the entire payment to the spouse as she is the one who deserves it more than anyone, and will this cause a legal hurdle? The father of the deceased employee claims he will go to court if we make the payment to his daughter-in-law.

Regarding the Full and Final Settlement, can this be made to the spouse itself?

Looking forward to your responses.

Regards, Saif **Location**: Madras, India

Response to Death Claim - Splitting of Group Term Insurance Settlement

In this situation, it is crucial to navigate the complexities of the legal framework and the family dynamics sensitively. Here are the steps to consider:

🔹 Legal Heir Claim Certificate: The submission of the legal heir claim certificate by the deceased employee's father, mother, daughter-in-law, and grandchild indicates a potential legal claim from multiple parties.

🔹 Nomination in PF Form: The nomination of the spouse in the PF form simplifies the process for the Provident Fund claim, ensuring a clear beneficiary for that specific benefit.

🔹 Insurance Company Policy: As the insurance company allows payment to the instructed party, the organization has the discretion to decide the recipient of the Group Term Life Insurance (GTLI) claim.

🔹 Consideration for Payment: Given the circumstances and the spouse's need to care for the child, it may be justifiable to make the entire GTLI claim payment to the spouse. This decision can be supported by the spouse's financial situation and the responsibility of raising the child alone.

🔹 Legal Implications: While the father of the deceased employee may threaten legal action, the organization can justify the decision based on the spouse's circumstances and the absence of a specific nomination for the GTLI claim.

🔹 Full and Final Settlement: The Full and Final Settlement can be made to the spouse, considering the overall situation and the need for financial support for the spouse and the child.

🔹 Communication and Documentation: It is essential to communicate the decision clearly to all parties involved and maintain detailed documentation of the rationale behind the payment to the spouse.

By following these steps and considering the welfare of the deceased employee's family, the organization can navigate the situation with empathy and compliance with relevant legal provisions.