Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part II)

Meera Textiles Ltd holds a life policy on its director and wants to assign it to Canara Finance as security. Under the Insurance Act, 1938 as given, which step is required for a valid assignment to be made?

A policy assignment must be made by an endorsement on the policy or a separate instrument signed by the assignor or authorised agent and attested by at least one witness, stating the assignment, reasons, assignee's antecedents and terms. Oral arrangements or court orders are not the prescribed mode.

  1. AAn endorsement on the policy or a separate instrument signed by the assignor or his authorised agent and attested by at least one witnessCorrect
  2. BAn oral agreement confirmed by the insurer's agent within thirty days
  3. CA court order obtained from the civil court before assignment
  4. DA registered deed attested by two gazetted officers

Explanation

The Act says assignment may be made only by an endorsement on the policy or a separate instrument signed by the assignor or his duly authorised agent and attested by at least one witness. It must set out the fact of assignment, the reasons, the assignee's antecedents and terms. Oral agreements, court orders or two gazetted witnesses are not required.

Did you get it right without looking?

One question tells you little. A timed set on Functions in Insurance and Compliance related thereto (Part II) shows your real accuracy, how long you take and where you lose marks.

Practise Functions in Insurance and Compliance related thereto (Part II)Free diagnostic mock

More Functions in Insurance and Compliance related thereto (Part II) questions