CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
LIC's non-life profits have been allocated to or reserved for the members under Section 28A. Under Section 28(2) of the LIC Act, how may these amounts be utilised?
Such profits are utilised for purposes the Board approves, including declaration or payment of dividend, issue of fully paid-up bonus shares to members, and crediting any reserves the Board creates. The Act does not confine use to a single purpose.
- AOnly for paying dividend to the Central Government
- BOnly for crediting policyholder bonus accounts
- CFor such purposes as the Board may approve, including dividend, fully paid-up bonus shares and crediting reservesCorrect
- DOnly for investment in government securities
Explanation
Section 28(2) states that profits allocated to or reserved for the members under section 28A are utilised for purposes the Board approves, including dividend, issue of fully paid-up bonus shares to members and crediting reserves. The other options impose restrictions the text does not contain.
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