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Home / Policy Services / HUF Policies

HUF Policies

Introduction :

A Hindu Undivided Family, which is also known as Joint Hindu Family is governed by Hindu Law.

An H U F consists of all persons lineally descended from a common ancestor and have not separated and include their wives and unmarried daughters. The head of the family is called ‘Karta’ who is solely responsible for all the affairs of the family. The members of the family are called Co-parceners who acquire interest in the family by birth. Co-parceners are admitted to the benefits of the family, but they are not liable to the commitment of H U F during their minority.

In view of the separate legal provisions specially in income-tax law, the H U F has important significance in life insurance. Life Insurance Policy is taken by the Karta on his life or on the lives of co-parceners where premiums are financed by H U F funds. As per the law relating of H U F, all income earned with the property of H U F, shall belong to H U F. As such where policies are taken on the lives of members of H U F and premiums there under are paid out of H U F funds, insurance amount when due would belong to H U F and it becomes a part of assets of H U F. However, under policies effected by the co-parceners on their own lives and where premiums are paid out of their own separate income, policy moneys when due become the part of the estate of the lives assured.

It is also important to note that neither the Karta of H U F nor any member thereon can taken out policies on their own lives for their own benefits or for the benefit of their dependants and finance them to the detriment of joint family funds. If, there fore, policy is financed through HUF funds irrespective of contractual positions enumerated in the policy document, with regard to the title thereto, the policy would belong to HUF entirely and as such the policy moneys would be payable only to the Karta of HUF who represents HUF as Manager. However, a member of HUF can take a policy on his own life for the benefit of his immediate family, provided the premiums there are not paid from HUF funds.

The life insurance policies are also effected by the Karta on the lives of minor co-parceners. The main distinction of such policies as compared to ordinary CDA or CAP policies or policies on the life of minor is that the latter policies cannot be issued with automatic vesting age clause. In other words, CDA or CAP; policies issued to the Karta on the lives of minors will not vest in the lives assured on the deferred date, but they will continue to be vested in the Proposer (if he is a Karta of HUF) or in HUF if the proposer is any other family member not being Karta and the date of vesting being only notional and being introduced to indicate the date on which the risk on the life assured commences if the life assured shall be alive on the deferred date and if all the premiums due prior to the deferred date have been paid under CDA or CAP policies the cash option under CDA policy and sum equal to half of the premiums paid under CAP policy shall be paid to the Karta of HUF.

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