Section 113 in The Insurance Act, 1938

113. Acquisition of surrender values by policy. 2[

(1) A policy of life insurance under which the whole of the benefits become payable either on the occurrence, or at a fixed interval or fixed intervals after the occurrence, of a contingency which is bound to happen, shall, if all premiums have been paid for at least three cosecutive years in the case of a policy issued by an insurer or five years in the case of a policy issued by a provident society as defined in Part III, acquire a guaranteed surrender value, to which shall be added the surrender value of any subsisting bonus already attached to the policy, and every such policy

1. Subs. by Act 47 of 1950, s. 4, for" Superintendent of Insurance" (w. e. f. 1- 6- 1950 ). 2. Sub- sections (1), (2) and (8) subs. by Act 13 of 1941, s. 61, for the original sub- sections (1) and (2).

issued by an insurer shall show the guaranteed surrender value of the policy at the close of each year after the second year of its currency or at the close of each period of three years throughout the currency of the policy: Provided that the requirements of this sub- section as to the addition of the surrender value of the bonus attaching to a policy at surrender shall be deemed to have been complied with where the method of calculation of the guaranteed surrender value of the policy makes provision for the surrender value of the bonus attaching to the policy: Provided further that the requirements of this sub- section as to the showing of the guaranteed surrender value on a policy shall be deemed to have been complied with where the insurer shows on the policy the guaranteed surrender value of the policy by means of a formula accepted in this behalf by the 1[ Controller] as satisfying the said requirements: Provided further that the provisions of this sub- section as to the showing of the guaranteed surrender value on a policy shall not take effect until after the expiry of six months from such 2[ date as the

1. Subs. by Act 47 of 1950, s. 4, for" Superintendent of Insurance" (w. e. f. 1- 6- 1950 ). 2. 1st January 1942, see notification No. 530-I (27) 141, dated the 6th December 1941, Gazette of India, 1941, Pt. I, P. 1754.

Central Government may, by notification in the Official Gazette, appoint in this behalf. (2) Notwithstanding any contract to the contrary, a policy which has acquired a surrender value shall not lapse by reason of the nonpayment of further premiums but shall be kept alive to the extent of the paid- up sum insured, and the paid- up sum insured shall for the purposes of this sub- section include in full all subsisting reversionery bonuses that have already attached to the policy, and shall, where the policy is one on which the maximum number of annual premiums payable is fixed and the premiums are of uniform amount, be before the inclusion of such bonuses not less than the amount bearing to the total sum insured by the policy exclusive of bonuses the same proportion as the total period for which premiums have already been paid bears to the maximum period for which premiums were originally payable.

(3) A policy kept alive to the extent of the paid- up sum insured under sub- section (2) shall not be entitled by virtue of that sub- section to participate in any profits declared distributable after the conversion of the policy into a paid- up policy.] [ (4)] 2[ Sub- section (2) and sub- section (3) shall not apply]-- 3[

(a) 4[ where the paid- up sum insured by a policy, being a policy issued by an insurer, is less than one hundred rupees inclusive of any attached bonus, or takes the form of an annuity of less than twenty- five rupees, or where the paid- up sum insured by a policy, being a policy issued by a provident society as defined in Part III, is less than fifty rupees inclusive of any attached bonus or takes the from of an annuity of less than twenty- five rupees, or]

(b) 5[ where the parties after the default has occurred in the payment of the premium agree in writing to some other arrangement, or

(c) 5[ ] to policies in which the surrender value is automatically applied under the terms of the contract to maintaining the policy in force after its lapse through non- payment of premium.

1. Original sub- section (3) renumbered (4) by Act 13 of 1941, s. 61. 2. Subs. by s. 61, ibid., for" This section shall not apply to". 3. Original clause (a) omitted by s. 61, ibid. 4. Subs. by s. 61, ibid., for the original clause (b). 5. Original clauses (c) and (d) re- lettered (b) and (c) respectively by s. 61, ibid.