How to withdraw money from bank, insurance or SIP without a nominee? Know the complete process

Crores of people in India run bank accounts, hold LIC policies and invest money in mutual funds, but a large number of them are those who have never made a nominee. Sometimes there was no time, sometimes the agent did not tell, and sometimes it seemed that this work would be done later also. As long as everything goes well, it is not missed, but when a member of the family dies suddenly, then the real trouble begins. Money is in the account, policy papers are in hand, SIP statements are also there but the bank refuses to give the money.

The insurance company asks for documents which the family is not aware of. The mutual fund folio gets frozen. Many families leave this dilemma and the money remains lying in the bank for years. In fact, money is not lost if there is no nominee. Legal heirs i.e. family members can claim their rights on that money, but for this there is a fixed procedure, fixed documents and it takes some time.

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How will money be withdrawn from the bank if there is no nominee?

If there is no nominee then the bank does not give the money directly. The family first has to prove that they are the legal heirs of the deceased. There are two ways for this, the first way is Legal Hair Certificate, this certificate is obtained from Tehsil or Municipality. It is written in it who are the legal heirs of the deceased. Banks manage with this for small amounts. The second way is Succession Certificate, for large amounts the bank asks for this certificate, it is obtained from the Civil Court and is issued under the Indian Succession Act 1925.

In this the court decides who has the right to the property of the deceased. This process may take several weeks to months. To withdraw money from the bank without a nominee, the account holder’s death certificate, legal heir certificate or succession certificate, Aadhaar card and PAN card of all the heirs, claim form of the bank and if there are more than one heir, then the written consent of all has to be given i.e. NOC (No Objection Certificate).

What to do if there is no nominee in mutual fund and SIP?

SEBI has implemented this rule from March 2025 that every mutual fund investor will have to either add a nominee or give in writing that he does not want to add a nominee. If this is not done then the account may be frozen and no transactions will take place. If someone had taken the old fund and did not make a nominee and he died, the legal heirs can claim it. For this, transmission request form has to be filled with AMC i.e. Asset Management Company. Along with this, succession certificate or legal heir certificate, certified copy of death certificate, Aadhaar and PAN card of the heir, and information about the bank account in which the money is required to be given.

AMC freezes the folio until the claim is settled. If all the documents are correct, the money is received in 10 to 15 days. Another important thing is that in a mutual fund, the nominee is not the owner of the money. Both the Supreme Court and SEBI have made it clear that the nominee is like a trustee and the real ownership belongs to the legal heir which is decided under the will or succession law.

What to do if there is no nominee in LIC or insurance policy?

If someone had taken a policy of LIC or any insurance company and did not make a nominee, then after death the money is received on the basis of ‘Evidence of Title’ i.e. proof of legal title. For this, one has to go to the nearest branch of LIC and inform about the claim. According to the rules of IRDAI (Insurance Regulatory and Development Authority of India), the insurance company is required to settle the claim within 30 days of receiving all the documents of the death claim.

If investigation is necessary, this time can extend up to 90 days. If the money is not received within the stipulated time, the insurance company has to pay 2% interest more than the bank rate. For the claim, claim form A which is available from the LIC branch, original policy document, death certificate, succession certificate or probate of will, NEFT mandate form and heir’s Aadhaar and PAN card have to be submitted. If death occurs within three years of the inception of the policy, the insurance company may ask for other documents and an investigation may also be conducted.

How to get succession certificate?

In case there is no nominee, succession certificate is sought at all three places like bank, mutual fund and insurance. It is issued by the Civil Court. For this, an application has to be made in the court in which the information and property of the deceased is verified. The court issues a public notice so that if there are any other claimants, they can come forward. If there is no objection, the court issues the certificate after the hearing. The entire process may take from a few weeks to several months.

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What is the harm in not making a nominee?

Once nominated, the family just has to go to the bank with the death certificate and two witnesses and get the money within a few days. In mutual funds the claim is settled within 10 to 15 days and in insurance within 30 days but in the absence of a nominee the same takes months or years. There are trips to the court, lawyers’ fees are spent and the money remains stuck, that too at a time when the family needs it the most.

Making a nominee is just a matter of filling a form. Visit the bank and fill the nomination form, update the policy by visiting the LIC agent and add the nominee by visiting the AMC website of the mutual fund.