Rule 21 - GPF Policy Assignment
Original Rule Text
RULE 21- GOVERNMEN NOT TO MAKE PAYMENTS TO INSURER ON BEHALF OF SUBSCRIBERS (1) Government shall not make any payments on behalf of subscribers to Insurance Companies nor take steps to keep a policy alive.
(2) A policy to be acceptable under these rules shall be one effected by the subscriber himself on his own life, and shall (unless it is a policy effected by a male subscriber which is expressed on the face of it to be for the benefit of his wife or of his wife and children or any of them) be such as may be legally assigned by the subscriber to the President.
Explanation 1.-A policy on type joint lives of the sub- scriber and the subscriber's wife or husband shall be deemed to be a policy on the life of the subscriber for the purpose of this sub-rule.
Explanation 2.- A policy which has been assigned to the subscriber's wife shall not be accepted unless either the policy is first-re-assigned to the subscriber or the subscriber and his wife both join in an appropriate assignment.
(3) The policy may not be effected for the benefit of any beneficiary other than the wife or husband of the subscriber or the wife or husband and children of the subscriber or any of them:
Provided that subscribers who took out policies under
Note 1 to Rule 21
(ii) or under clause
(b) or (C) of Rule 21A of the Rules in force prior to the 1st April, 1934 shall remain subject to the provisions of those rules in so far as policies so taken out are concerned.
What This Means
This rule clarifies the government's role, or lack thereof, regarding insurance policies linked to your General Provident Fund (GPF). Simply put, the government will not pay your insurance premiums or take any steps to keep your insurance policy active. You, as the subscriber, are solely responsible for managing and paying for your insurance.
For an insurance policy to be acceptable under these rules, it must be taken out by you, the subscriber, on your own life. Generally, you will need to legally assign this policy to the President of India. However, if the policy is specifically for the benefit of your wife, or your wife and children, or any of them, then this assignment to the President might not be required. The rule also clarifies that a policy covering both you and your spouse (joint lives) is considered a policy on your life for these purposes.
Furthermore, the rule restricts who can benefit from these policies. You can only name your wife or husband, or your wife or husband and children, or any of them, as beneficiaries. If you previously assigned a policy to your wife, it must either be re-assigned back to you, or both you and your wife must join in a new, appropriate assignment for it to be accepted under these rules.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1The government will not pay your insurance premiums or help keep your policy active; you are responsible for all payments.
- 2Your insurance policy must be taken out by you, the subscriber, on your own life.
- 3Policies generally need to be legally assigned to the President of India, unless they are explicitly for the benefit of your wife, or wife and children.
- 4You can only name your spouse, or your spouse and children, or any of them, as beneficiaries.
- 5A joint life policy covering both you and your spouse is considered a policy on your life.
- 6If a policy was previously assigned to your wife, it must be re-assigned to you or jointly assigned by both of you to be acceptable.
- 7Specific older policies taken before April 1, 1934, may be subject to previous rules.
Practical Example
Mr. Anil Kumar, a Section Officer, wants to use his GPF to support an insurance policy. He decides to take out a new life insurance policy for a sum assured of Rs. 10 lakhs. According to Rule 21, Mr. Kumar understands that he must pay all the premiums himself; the government will not contribute or manage these payments for him.
He ensures the policy is on his own life and initially considers naming his brother as a beneficiary. However, after reviewing Rule 21(3), he realizes he can only name his wife, Mrs. Priya Kumar, or his children, or both, as beneficiaries. He decides to name Mrs. Priya Kumar and their two children as beneficiaries. Since the policy is for the benefit of his wife and children, he notes that the requirement to assign it to the President might not apply in his case, but he confirms this with his accounts department. If he had an older policy that he had previously assigned solely to his wife, he would need to either get his wife to re-assign it back to him, or both he and his wife would have to sign a new assignment document to make it acceptable for GPF purposes.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Test Your Knowledge
Question 1 of 3
According to Rule 21(2) of the General Provident Fund Rules, a life insurance policy offered as security for GPF withdrawal must generally be: