Navigating Group Term Insurance: Can We Legally Pay the Deceased Employee's Benefits to His Wife?

Dear All,

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

He is married and has a 1-year-old daughter. His father and mother are retired, well-settled, and have one more middle-aged son who is also well-settled.

The parents are super senior citizens with sufficient savings, a house, and LIC amounts of the deceased.

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

The spouse resides with the in-laws but is requesting the entire claim be paid to her and the minor daughter. We, as a company, requested a No Objection Certificate (NOC), but the spouse is unable to provide one, citing potential family disputes.

The insurance company stated they will pay to whomever we designate, as this is a Group policy taken by the organization.

Legal Considerations for Payment to Spouse

The question is, can we make the entire payment to the spouse as she is the one who arguably deserves it most, and would this pose a legal challenge? Could the deceased employee's father go to court if we pay the amount to his daughter-in-law?

Full and Final Settlement

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

Looking forward to your responses.

Hi, One way out for the below query:

Can we make the entire payment to the spouse?

The question 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? Can the father of the deceased employee go to court if we make the payment to his daughter-in-law?

Ask the spouse to submit an undertaking from the parents stating that the amount is to be disbursed to the wife of the deceased employee and submit it to you to process the payment.

Ensure nominations are in order

Please ensure all nominations are in order for the rest of the employees. If not, hold their increments/incentive payouts, etc., until they nominate. Otherwise, it will be a headache for you in the future.

Alternative payment method

Another way is to deposit the Full & Final (F&F), Gratuity, and any other pending payments into the employee's salary account as you would if the employee retired. Let the family take up with the bank to whom those account access needs to be given. Typically, one of them would have access to the account info.

Thanks.

Hi, Undertaking from parents will not be valid. Tomorrow, they might take a different stand that they were forced to sign the undertaking, etc.

The Right Process for Legal Heir Certificate

The right process is to ask for a Legal Heir Certificate issued by the respective State Government from the nominee of the employee. In the legal heir certificate, normally, the surviving spouse, children, father, and mother will be included. You can distribute the benefits equally to all nominees as per the Legal Heir Certificate.

In Case of Dispute: Succession Certificate

However, in case of a dispute among nominees about the percentage of sharing, who will get more, etc., then advise them to get a Succession Certificate. A Succession Certificate will be issued by a competent civil court certifying a rightful person to be the successor of a deceased person. The civil court will analyze all facts based on the evidence provided before the court before issuing the Succession Certificate. Once the Succession Certificate is obtained, you can release the settlement as per the directive of the court.

Hi, Adding to the above, obtaining a Succession Certificate can be a time-consuming process, and the Court may not issue it immediately as it involves many steps. Therefore, it should be kept as a last resort.

I recommend reaching out to the involved parties and advising them to try and come to a mutual agreement. It should be explained to them that if they cannot reach a consensus, the Company will have no choice but to request a Succession Certificate, which will be a lengthy procedure.

Regarding the PF Claim, even if the deceased employee was married with a surviving wife and child, the surviving mother will also be considered. It is uncertain whether the PF office required a Legal Heir Certificate from the nominees when submitting the PF claim forms. The nominees are eligible for PF, EDLI, and Monthly Pension benefits.

Dear Sir/Madam,

Is there any way to opt out of 1) NOC from parents and 2) succession certificate to resolve the aforementioned matter?

Hi, As already stated, it is advisable to proceed as per the legal process, either with a legal heir certificate or through succession in case of a dispute regarding who should receive a higher percentage.

Hi, as already clarified, you cannot make unilateral decisions. You need to follow the process and direct the concerned parties to submit the Legal Heir Certificate first.

Hi, it would be better if you consult an advocate who specializes in insurance laws and regulations before making a decision on this matter.