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nagaraja k (Insurance Advisor)     30 July 2009

How is it.......

I wish to know how different insurance companies have different defination for "lapsed" and "Paid up" policies. Is there a specific section in the insurance Act?



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 1 Replies

SANJAY JOIL (LAW STUDENT)     27 August 2010

Yes, section 113 of the Insurance Act,1938  deals with this.  If a premium is not paid for   3 years then is policy  is  lapsed without  acquiring surrender value.  After payment of premium for 3 years  your  policy is lapsed with surrender value.  paid up policy  amount is calculated as under :

 

SUMASSURED X  PREMIUM PAID FOR / PREMIUM PAYING TERM.  IF THE SUM ASSURED IS 100000 AND THE TERM IS  20 YEARS AND IF YOU PAID PREMIA for only  3 years then paid up value will be  :

100000 X 3/20   ie   15000  .   then   bonus ( now payable after  3 years) is added in it.   However this amount is payable at the time of maturity .  Its present value is known as   surrender value.


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