Rule 27 - Policy Lapse
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
This rule explains what happens if an insurance policy, for which you've used money from your General Provident Fund (GPF), is no longer properly secured for the government.
If you've taken an advance or withdrawal from your GPF to pay for a life insurance policy, you are required to assign that policy to the President of India. This rule states that if this policy then lapses (meaning it stops being active, usually due to unpaid premiums), or if you assign it to someone other than the President, or if you use it as collateral for a loan or put any other financial burden on it, then you are in violation.
In such cases, the money you originally took from your GPF to pay for that policy will be treated as if you never properly assigned the policy in the first place. This typically means the amount will be considered a temporary advance and will need to be recovered from your salary or other dues. The main idea is to ensure that if GPF funds are used for an insurance policy, that policy remains a secure asset for the government's benefit until maturity or until the GPF advance is fully repaid.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1If you use GPF money for an insurance policy, that policy must remain active and not lapse.
- 2The policy must be assigned *only* to the President of India, as per the rules.
- 3You cannot use the policy as collateral for personal loans or place any other financial burden on it.
- 4Violating these conditions means the GPF amount used for the policy is no longer considered properly secured.
- 5The GPF funds used for the policy will be treated as an unauthorized advance and will be recovered.
Practical Example
Ms. Priya, an Assistant Section Officer, took a withdrawal of Rs. 50,000 from her GPF account to pay for her life insurance policy premiums. As per the rules, she correctly assigned this policy to the President of India. A few years later, Ms. Priya faced an urgent financial need and, without realizing the implications, took a personal loan from a bank, using her life insurance policy as collateral.
During a routine audit of GPF accounts, it was discovered that Ms. Priya's policy, which was funded by GPF withdrawals, was now encumbered with a bank loan. According to Rule 27, this action is a violation because the policy is no longer exclusively assigned to the President and is now charged. As a result, the Rs. 50,000 she withdrew from her GPF will be treated as a temporary advance that was not properly secured. Her department will initiate recovery proceedings to deduct this amount from her future salary installments until the full amount is repaid.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Cross References
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 27 of the General Provident Fund Rules, what is the primary consequence if an insurance policy, assigned as security for a GPF withdrawal, lapses?