Fixed deposit is one of the popular investment options which offers an assured return and can aid you in building your savings. In case of the death of the deposit holder before the fixed deposit maturity, one should be aware of the method to claim the same. The claim process relies on the nature of a fixed deposit account.
Fixed Deposit Account has clauses that a depositor has to choose while opening an account. If the Fixed Deposit is in the name of one person, the bank will verify whether there’s a nominee stated. If the account has nominee details, banks will verify the nominee’s identity and transfer the FD interest rate and the principal money.
The nomination facility aims to simplify the procedure for settlement of claims on the account holder’s death. The person mentioned as a nominee needs to act as the trustee of legal heirs.
Here are the common models of FD accounts and the procedure you need to understand to claim the maturity amount in case of the death of your loved ones.
Single holding Fixed Deposit account with nomination
If the Fixed Deposit Account is in one person’s name and it includes a nominee, then the nominee can claim the FD amount upon the death of the account holder by submitting the death certificate of the depositor along with the nominee’s identity proof.
Single holding Fixed Deposit without nomination
In such a case, a family member of the depositor should submit a will or succession certificate and the depositor’s death certificate to claim the fund. If there is no will, the bank will request a certificate of the legal heir. The sum would be allotted among all legitimate heirs equally.
Joint Accounts
If the FD is in joint names, the claim process will depend on the kind of joint account so as “Either or Survivor”, “Anyone or Survivors”, “Former or Survivor”, and “Latter or Survivor”.
Either or Survivor
When the FD is subject to the “Either or the Survivor” clause, the final balance will be paid to the surviving account holder by the bank when one holder dies. If there is a nomination in the account, then also the funds will go to the survivor. The nominee gets access to funds only when both the account holders expire.
If there is no candidate and both survivor pass, the proceeds will be distributed to the legitimate heirs of both depositors.
Anyone or Survivor
If the FD is in the name of more than two account holders, then the bank will pay the maturity amount to survivors if one or more account holders die.
The nominee will get the funds on the death of all depositors. If there is no nomination on the death of one or more depositors, the legal heirs of the deceased depositor and the surviving deposit holders will get the amount.
If all the depositors are dead, the legal heirs of all the account holders will get the sum.
Former or Survivor
In this clause of joint accounts, only the first account holder can withdraw money from the account. Only after the death of the first account holder, the second account holder can access the funds.
Here the second account holder must submit the death certificate of the first account holder.
In case of the death of both account holders, the nominee gains access to funds. If there is no nomination when all depositors die, then the legal heirs of all account holders will get access to the funds.
Latter or Survivor
The only distinction is that the other holder of the account is the main holder and will manage the account. This is pretty much similar to the former or survivor. The first account holder can only have the right to funds until the second holder dies. The candidate shall get the principal sum along with interest if the two depositors die. If there are no nominees and the two account holders die, then all the legal heirs of the account holders will receive the money.
It is important to have a nominee in a fixed deposit as it simplifies the process for settlement of claims on the account holder’s death. If the depositor has mentioned the nomination details, the money will be passed to the nominee after identity verification.
