If an employer provides life insurance cover to its employees as part of the reimbursement package, HR departments should ensure that employee records are complete and up to date, particularly the nomination forms for any such life insurance cover. As stated the UAE Civil Code, life insurance policy proceeds can be paid out directly to the nominated beneficiary upon death of policy holder, and indeed this is often a much needed resource for the surviving family at a time when other assets are frozen and potentially subject to inheritance procedures which can be time-consuming.
The legal status of life insurance proceeds must be contrasted to the status of the deceased employee’s final dues, including outstanding salary, holiday pay, and end of service gratuity. Although HR departments may feel under a lot of pressure to calculate the final dues and pay out to the surviving family at the earliest, this should be done with care and consideration. The legal position is that the gratuity is an asset of the deceased, along with the final salary and any outstanding holiday pay. This should therefore be paid out to the heirs, as stated in a relevant court order. It is not advisable for an employer to pay out these dues immediately to the surviving spouse as the company may be subject to later claims by other entitled legal heirs, as under local inheritance laws, the surviving spouse is not entitled to the whole estate.
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