How to claim fixed deposit after account holder's death for single fd account and joint fd account

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Fixed deposits (FDs) are one of the preferred investment instruments among conservative investors who have a low risk appetite. This is because FDs are nearly risk-free and offer guaranteed1 interest income. The rates of interest are also known beforehand, so account holders are aware of the exact amount of interest they will earn.

For instance, say a person has deposited Rs. 5 lakhs in a fixed deposit account for a period of 3 years. The rate of interest on this deposit is 6% per annum. In this case, the account holder will earn a total interest of Rs. 97,809 over the investment tenure. This amount can be computed beforehand using an FD interest calculator online.

On account of the certainty and assurance that fixed deposits offer, many conservative investors prefer FDs over other high-risk investment avenues. Chances are that even your parents or relatives may have one or more fixed deposits in their name.

In case of the account holder's demise, you, as the legal heir, should be aware of how you can claim the amount in the FD account. The person who is entitled to make the claim as well as the procedure for claiming the amount depends on the type of FD account.

Let us take a closer look at how this works in case of single and joint fixed deposit accounts.

Single FD accounts

In single fixed deposit accounts, there is only one account holder. This person is responsible for making the deposit, withdrawing the interest if needed, and ultimately receiving the maturity amount at the end of the investment tenure.

However, what happens if the holder of a single FD account passes away during the investment tenure itself? That depends on the status of the nomination.

Single FD accounts with nomination

Nomination is the process by which the holder of an account assigns a nominee to the said account. Typically, when anyone opens a fixed deposit with a bank, a company or even with the Post Office, they will be required to assign a nominee to the account.

If your family member has nominated you to their FD account, the process of withdrawing the funds becomes easier in case of their demise. All you need to do is get in touch with the FD account provider and submit the following documents –

  • The FD claim form
  • The account holder's death certificate
  • Your ID proof

The bank or FD provider will verify your identity and allow you to claim the amount if your claim is verified and approved.

Single FD accounts without nomination

If your family member has not assigned a nominee to their single FD account, things can get a little more challenging. Since there is no legal proof that you are the rightful heir to the account, you will have to submit the following documents to the FD account provider to prove your right to the amount.

  • The FD claim form
  • The account holder's death certificate
  • The account holder's will or succession certificate
  • The ID proofs of all the legal heirs

Once the paperwork is verified and approved, all the legal heirs will receive the amount in the FD account in an equal ratio.

Joint FD accounts

Joint FD accounts are held by multiple individuals. So, it may happen that one or more of the account holders pass away before the others. In some rare cases, the demise of all the account holders may occur simultaneously. Depending on the situation and the clause associated with the joint FD account, the right to the FD amount will be decided.

Let us take a closer look at the different possible scenarios in case of joint FDs.

Joint FDs with an 'Either or Survivor' clause

The Either or Survivor clause is for joint FDs that have only 2 account holders. Here, if one of the account holders passes away, the surviving account holder is entitled to the FD account balance.

  • Even if the joint FD account has a nominee, the surviving account holder is the person who is entitled to the funds.
  • The nominee will only get the funds if both the account holders pass away.
  • In case there is no nomination and both the account holders pass away, the legal heirs are entitled to the FD account balance.

Joint FDs with an 'Anyone or Survivor' clause

The Anyone or Survivor clause is for joint FDs that have more than 2 account holders. Here, if one or more of the depositors pass away, the surviving account holders will receive the funds in the FD account.

  • If nomination has been done for the joint FD account, the nominee will only receive the funds in case of the demise of all of the account holders.
  • Now, say there is no nomination, and only one or more of the depositors pass away. In this case, the surviving depositors as well as the legal heirs of the deceased persons get the funds.
  • If there is no nomination, and all of the depositors pass away, the legal heirs of all the depositors will get the funds.

Joint FDs with a 'Former or Survivor' clause

The Former or Survivor clause is also for joint FDs that have only 2 account holders. Here, only the first account holder, also known as the former, has the right to withdraw funds from the FD.

  • In case of the former's demise, the second account holder can withdraw the funds.
  • If both account holders pass away, the nominee will be entitled to the funds.
  • If there is no nominee, the legal heirs of the two depositors will be entitled to the funds.

Joint FDs with a 'Latter or Survivor' clause

The Latter or Survivor clause is also for joint FDs that have only 2 account holders. It is very similar to the Former or Survivor clause. The only difference is that here, the second account holder, also known as the latter, has the first right to operate the account and withdraw funds from the FD.

The importance of nomination

The process of nomination is very important in a fixed deposit, because it makes the process of claiming the FD amount much easier for the legal heirs. So, if you are opening a new FD account or starting any other investment, check if the service provider offers a nomination facility and make use of it.

Nomination is not only essential in a fixed deposit. It is crucial in all investment options. Even if you are buying a life insurance plan, for instance, you will have to assign a nominee. This way, you can ensure that in case of your demise during the policy term, your loved ones will be able to easily receive the payouts under the plan.

Like FDs, there are many life insurance plans that also offer guaranteed1 returns. Known as savings plans, these policies give you the benefit of savings and insurance. The ABSLI Fixed Maturity Plan is one such life cover. You can pay a single premium as low as Rs. 12,000 and enjoy the benefit of assured returns up to 6.41%. If you do opt for this plan, make sure you assign your legal heir as your nominee.

Conclusion

This sums up the process and the finer details of claiming the FD amount in case of a loved one's demise. In case such a situation comes up, make sure you check the nature of the account and the status of the nomination, so you can proceed accordingly. Alternatively, if you have a single or joint FD, let your legal heirs know the details of these accounts, so it easier for them to raise a claim if they need to.

1 Provided all due premiums are paid.
ABSLI Fixed Maturity Plan is a Non- Linked Non- Participating Individual Savings Life Insurance Plan (UIN: 109N135V01)
ADV/7/22-23/689

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