IREC Rule No.934: Payment Of Policies When Subscriber Quits Service etc

934.  Payment Of Policies When Subscriber Quits Service etc:-

(1)   Save as provided in Rule 937, when the subscriber;

(a)  Quits service; or

(b)  Has proceeded on leave preparatory to retirement and applies to the Accounts Officer for re-assignment or return of the policy; or

(c)  While on leave has been permitted to retire, or declared by a competent medical authority to be unfit for further service, and applies to the Accounts Officer for re- assignment or return of the policy; or.

(d)  Pays or repays to the fund the whole of any amount withheld or withdrawn from the fund for any of the purposes mentioned in Rule 927 with interest thereon, the Accounts Officer shall;

(i)       If the policy has been assigned to the President under Rule 932 reassign the policy to the subscriber or the subscriber and the joint assured, as the case may be, in the prescribed form of re-assignment and make it over to the subscriber together with a signed notice of the re-assigned addressed to the Insurer.

(ii)      If the policy has been delivered to him under clause (b) of sub-rule (1) of Rule 932 make over the policy to the subscriber.

Provided further that, if the policy has matured or been assigned or charged to retirement, or after being, while on leave, permitted to retire or declared by a competent medical authority to be unfit for further service, returns to duty, any policy so re-assigned, or made over shall, if it has not matured or been assigned or charged or encumbered in any way, be again assigned to the President and delivered to the Accounts Officer in the manner provided in rule 932 and  thereupon, the provisions of these rules shall, so far as may be, again apply in respect of the policy.

Provided further that, if the policy has matured or been assigned or charged or encumbered in any way, the provisions of sub-rule (4) of Rule 932 applicable to a failure to assign and deliver a policy shall apply.  

Government Of India’s Decision: The amount mentioned in clause (d) above may be repaid in convenient installments, the number of which should be settled between the subscriber and the Accounts Officer. The policy will, however, be re-assigned only after the re-payment of the amount with interest is completed.

[Authority: No.F(E) 59/PF-43-2, 19.08.1959]

(2)  Save as provided in Rule 937 when the subscriber dies before quitting service, the Accounts Officer shall;

(i)    If the policy has been assigned to the President under Rule 932 re-assign the policy to such person as may be legally entitled to receive it, and shall make over the  policy to such person together with a signed notice of the re-assignment addressed  to the Insurer;

(ii)    If the policy has been delivered to him under clause (b) of sub-rule (1) of Rule 932, make over the policy to the beneficiary, to such person as may be legally entitled to receive it.

Government Of India’s decision: Sub-rule (2) of Rule 934 provides that a policy, which has been assigned to Government should be re-assigned to the subscriber, beneficiary or to such a person as may be legally entitled to receive it. No difficulty arises in a case in which a subscriber and his wife are jointly assured or where they have joint interest in the policy, and the husband and wife are joint assignors as the survivor in such cases as the surviving co-assignor, is legally entitled to have the policy re-assigned to him or her. In all other cases, however, where the subscriber dies in service the problem arises as to who is legally entitled to re-assignment. To be on the safe side, therefore, it is essential that Government should satisfy themselves in all cases that the person to whom they re-assign the policy is the person who is legally entitled to receive it and this can be achieved only on production of letter of administration, probate or succession certificate. This requirement, however, has given rise to some degree of inconvenience as production or legal representation involves the expenditure of an appreciable sum of money which in many cases may be out of all proportion to the balances standing to the credit of a deceased subscriber. To minimize the degree of inconvenience the following method will be available to the subscribers by which re-assignment can be secured by them without production of probate or letters of administration;

(i)   Re-assignment of the policy in favor of the subscriber if an assignment in the prescribed form in favor of Government is already in existence;

(ii)  Execution of an assignment in favor of the subscriber and his wife / husband, and / or major son(s) and / or daughter(s) as joint tenants in the prescribed form;

(iii)   Execution of an assignment by the subscriber and his wife / her husband and / or major son(s) and / or major daughter(s) in the prescribed form in favor of Government.

Such an assignment has the effect of creating a joint tenancy in favor of the wife / husband, and / or major, son(s) and / or major daughter(s) with the result that she / he / they is / are entitled to claim the policy in her / his /  their own right as surviving tenant or co-tenants on the death of the subscriber.

[Authority: No.F(E) 57/PF-43(2), 12.06.1958]