Bank Fixed Deposit (FD) -What To Do Wen Depositor Dies Before Maturity?

An individual who holds a bank fixed deposit (FD) receives a sum of money after the term of the deposit. Fixed deposits are the most popular investment option among investors. The risk-free nature of investments is what makes FDs preferable. Even though fixed deposits are secure, uncertain events like the death of an account holder are unpredictable. If you are wondering about the consequences of the death of an FD account holder, you should read further. 

Steps to withdraw FD after the account holder’s death

Nominees of the FD account get the rights to the account after the demise of the account holder. The nominee becomes the custodian if it is a single-holder account. The process of claiming the FD amount for an individual account is as follows:

1. Contact FD provider 

After the account holder’s death, the nominee or legal heir can claim the amount. If the account has joint holders, the remaining holders can claim the amount depending on the terms and conditions of the lender. The claimant should submit several documents to get the withdrawal approved.

2. Submit the necessary documents 

A nominee must adhere to the process of FD withdrawal. It includes submitting all the essential documents such as proof of death of the account holder and the proof of identity of the claimant. The documents to claim Bank FD are:

  • Death Claim application: The application must be signed by the nominees.
  • Death certificate: The death certificate of the deceased should be submitted.
  • Identity proof of the claimant: The claimant must submit all the necessary documents as proof of identity as per the policies of a bank or financial institution.

Opt to continue or close the FD 

Once the proof of death of the account holder is received, most of the procedure is completed. The nominees are then given two options. A nominee can either hold the account till maturity or close the FD. The deceased person’s name is deleted from the account and the nominee’s name is added. It is up to the nominee to continue the fixed deposit till maturity or withdraw the amount. The interest rate calculator for FD can be used to calculate the interest received upon withdrawal.

Ways to hold the Bank Fixed Deposit (FD)

The process of claiming bank FD varies depending on the type of account. Fixed deposit accounts can be of single or joint holding.

Either or Survivor:

This type of joint account has two account holders. According to the terms either one of the account holders receives the amount on maturity. If one of the holders dies, the remaining individual gets the share of holdings under the deceased person’s name. If both the account holders pass away, the nominees or legal heirs will receive the amount.

Anyone or Survivor/s:

This is a type of joint account that has more than two account holders. The death of one account holder will lead to the surviving holders receiving the amount along with interest.

Former or Survivor:

This type of joint account has two account holders. Let’s say, the account holders are ‘A’ and ‘B’. Here, ‘A’ operates the account and the amount along with interest will get transferred to ‘B’ if ‘A’ passes away. The death of one account holder will lead the surviving account holder to receive the amount. If both account holders die, the nominees have the right to claim the amount. In the absence of a nominee, the legal heirs of account holders get the rights to the account.

Latter or Survivor:

This is a type of joint FD account with one primary and one secondary account holder. The latter of ‘A’ or ‘B’ i.e., ‘B’ will receive the amount on maturity. On the demise of the primary holder, the secondary holder gets ownership of the FD. If both the account holders pass away, the nominee or legal heir is entitled to the FD

Single holding account:

In the case of an individual account, the right to the account, including the interest earned will be transferred to the nominee. The nominee can choose to withdraw the FD before maturity or continue the FD account. The interest rate calculator for FD will help you understand the returns earned on withdrawal. If a nominee is not assigned, the legal heir will receive the FD. The claimant must submit the identity proof of death of the account holder.

Conclusion

While creating a fixed deposit account, adding nominees makes the transfer of fixed deposits easier. Submission of necessary documents also helps in faster transfer. In the end, depending on the regulations of the Reserve Bank of India (RBI), the policies of banks or financial institutions, the steps to claim the FD amount change.

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