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Rule 27 - Policy Lapse | KartavyaDesk

GPF Rules

Original Rule Text

RULE 27- LAPSE OR WRONGFUL ASSIGNMENT OF POLICIES If the policy lapses, or is assigned, otherwise than to the President under rule 22, charged or encumbered, the provisions of sub-rule (4) of rule 22 applicable to a failure to assign and deliver a policy shall apply.

What This Means

Rule 27 of the General Provident Fund (GPF) Rules deals with what happens to your GPF if you've used an insurance policy as security for your GPF withdrawal and that policy then lapses (meaning you stop paying premiums and the policy becomes inactive) or if you wrongly assign the policy to someone other than the President of India (as required by Rule 22). Essentially, it states that if either of these things happens, the consequences are the same as if you had failed to assign and deliver the policy to the President in the first place. This means you'll be required to repay the amount you withdrew from your GPF based on that policy.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Rule 27 addresses the consequences of a lapsed or wrongly assigned insurance policy used as security for GPF withdrawal.
  • •A 'lapsed' policy means the policyholder stopped paying premiums, rendering it inactive.
  • •Wrongful assignment refers to assigning the policy to someone other than the President of India, which is against GPF rules.
  • •The consequence is the same as failing to assign the policy at all: repayment of the GPF withdrawal amount.
  • •This rule protects the GPF from losses due to policy lapses or incorrect assignments.

Practical Example

Mr. Sharma, a government employee, withdrew ₹2,00,000 from his GPF to pay for his daughter's education. He assigned his life insurance policy, worth ₹2,50,000, as security, as per Rule 22. However, after a year, Mr. Sharma faced financial difficulties and stopped paying the premiums on his insurance policy, causing it to lapse. According to Rule 27, because the policy lapsed, the same penalties apply as if he had never assigned the policy in the first place. Therefore, Mr. Sharma will be required to repay the ₹2,00,000 he withdrew from his GPF, along with any applicable interest, as determined by the GPF rules.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What does 'lapse' mean in the context of an insurance policy?▼
A 'lapsed' policy means the policyholder has stopped paying the required premiums, and the policy is no longer active or providing coverage.
To whom should I assign my insurance policy when using it as security for a GPF withdrawal?▼
According to Rule 22, you must assign the policy to the President of India.
What happens if I assign my policy to my spouse instead of the President of India?▼
That would be a wrongful assignment under Rule 27. The consequences are the same as if you failed to assign the policy at all, meaning you'll have to repay the withdrawn GPF amount.
If my policy lapses, do I have to repay the entire withdrawal amount immediately?▼
The repayment terms will be determined by the GPF rules in effect at the time. You will likely have to repay the amount, possibly with interest, according to a schedule set by the authorities.
Does Rule 27 apply if I surrender the policy instead of letting it lapse?▼
Surrendering the policy would likely be treated similarly to a lapse, triggering the repayment obligation under Rule 27, as the security provided by the policy is no longer valid.

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 27 of the General Provident Fund Rules, what is the primary consequence if an insurance policy, assigned as security for a GPF withdrawal, lapses?

Related Rules

Rule 13GPF (Central Services) Rules, 1960 - Rule 13Rule 15GPF (Central Services) Rules, 1960 - Rule 15Rule 20GPF (Central Services) Rules, 1960 - Rule 20Rule 16GPF (Central Services) Rules, 1960 - Rule 16Rule 18GPF (Central Services) Rules, 1960 - Rule 18

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