CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
A student states that LIC must first pay all profits from a non-life business to the Central Government and only then may it keep reserves. Which is correct under Section 28A of the LIC Act, 1956 as amended?
The statement is wrong. Section 28A requires provision for reserves and other necessary or expedient matters first, and only the balance of non-life profits is allocated to or reserved for the members. Payment to the Central Government was replaced by the 2021 amendment.
- ACorrect, payment to the Government precedes any provision for reserves
- BIncorrect, provision for reserves and other necessary or expedient matters is made first, and only the balance goes to membersCorrect
- CIncorrect, no reserves may be created from non-life profits
- DCorrect, but only for profits from branches outside India
Explanation
Section 28A says that after making provision for reserves and other matters for which provision is necessary or expedient, the balance is allocated to or reserved for members. The Government payment no longer applies after the 2021 amendment, and reserves are not prohibited.
Did you get it right without looking?
One question tells you little. A timed set on Life Insurance shows your real accuracy, how long you take and where you lose marks.
More Life Insurance questions
- Rohan holds a policy issued in 1954 by a private insurer whose controlled business was later transferred to and vested in the Life Insurance…
- The Central Government notifies in the Official Gazette a date from which a body called the Life Insurance Corporation of India is to come i…
- Under section 14 of the LIC Act, 1956, LIC can reduce amounts of insurance under life contracts of a transferred insurer. Which policy falls…
- LIC has a branch in a country outside India that shows a surplus. Under Section 28 of the LIC Act as it now stands (sub-section (4), inserte…
- Before the Insurance Regulatory and Development Authority Act, 1999 came into force, Sarvodaya Mutual Ltd, a private insurer, held a registr…
- LIC's overseas branch in a foreign country earns a surplus. Under Section 28(4) of the LIC Act, 1956 as inserted in 2025, how is that branch…