Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Life Insurance

LIC earns profit of ₹200 crore from a business other than life insurance. After making provision for reserves and other necessary matters, ₹120 crore remains. Under Section 28A of the LIC Act as currently in force, how is the balance treated?

The ₹120 crore balance is allocated to or reserved for the members. Section 28A, as substituted in 2021, replaced the earlier requirement to pay it to the Central Government.

  1. AIt is paid to the Central Government
  2. BIt is allocated to or reserved for the membersCorrect
  3. CIt is paid to life policyholders as a bonus
  4. DIt is transferred to the Insurance Association of India

Explanation

Section 28A, as substituted in 2021, provides that after provision for reserves and other necessary matters, the balance of profits from non-life insurance business is allocated to or reserved for the members. The earlier wording, paid to the Central Government, has been replaced. The Insurance Association of India provision (Section 64A of the Insurance Act) has been omitted.

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.

Practise Life InsuranceFree diagnostic mock

More Life Insurance questions