CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
Under section 14 of the LIC Act, 1956, LIC can reduce amounts of insurance under life contracts of a transferred insurer. Which policy falls within this power?
The 5 December 1955 policy falls within the power. Section 14 covers contracts entered into by a transferred insurer before 19 January 1956, whose controlled business vested in LIC. Later policies, LIC's own policies and untransferred insurers' policies are outside it.
- AA policy issued by the transferred insurer on 10 March 1960
- BA policy issued by the transferred insurer on 5 December 1955Correct
- CA policy issued by LIC itself on 1 October 1957
- DA policy issued by a foreign insurer in 1950 whose business was never transferred to LIC
Explanation
The power applies to contracts entered into by the insurer before 19 January 1956, and the insurer's controlled business must have been transferred to and vested in LIC. Only the December 1955 policy fits both conditions.
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