Para 12.22 — MSO (A&E)
Original Rule Text
12.22 In the case of policies financed from Provident Funds, the Accounts Officer should satisfy himself by a reference to the company at the time the policy is delivered to him:-
Such enquiries need not be made, however, in the case of a policy which is expressed on the face of it to be for the benefit of the wife of the subscriber or of his wife and children or any of them.
No other special steps should be taken by him subsequently to ascertain whether these policies have lapsed or have become encumbered, but when concrete evidence comes to notice of a policy having lapsed or having become encumbered enquiries should be made and the exact position ascertained; but if
(b) that recoveries of Principal and Interest, if due, under rules, are being made in accordance with the sanction; and
(c) that the recoveries are regular
(iii) The Section Officer should also exercise the checks detailed at (a),
(b) and
(c) of clause
(ii) above to the extent as may be prescribed.
(i) that no prior assignment of the policy exists; and
(ii) that the policy is not otherwise encumbered.
such policy is merely deposited with the Accounts Officer (and is not assigned) he should, as a matter of precaution inform the company that the policy has been so deposited and ask that any dealings involving it should be communicated to him (the company may refuse to accept such a notice but this action should always be taken notwithstanding).
What This Means
When an insurance policy is financed from a Provident Fund, the Accounts Officer must confirm with the insurance company that no prior assignment exists and the policy is not encumbered. This check is not needed if the policy itself states it is for the benefit of the subscriber's wife or children. While no ongoing monitoring is required, if evidence of a policy lapsing or becoming encumbered surfaces, the AG must investigate. If a policy is merely deposited (not assigned), the AG should inform the insurance company as a precaution.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1AG must verify with the insurance company that no prior assignment or encumbrance exists
- 2Exception: policies explicitly benefiting the subscriber's wife/children need no such check
- 3No routine monitoring of policy status is required after initial verification
- 4If a lapse or encumbrance comes to notice, the AG must investigate immediately
- 5For deposited (unassigned) policies, the AG should notify the insurance company as a precaution
Practical Example
A subscriber deposits a LIC policy (not assigned) with the AG's office for PF financing. The AG writes to LIC confirming the policy has no prior assignment or lien. The AG also informs LIC that the policy has been deposited with their office, requesting that any future dealings on the policy be communicated to them. Five years later, the AG learns the subscriber has taken a loan against the same policy — this triggers an immediate investigation.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
When can the AG skip verifying with the insurance company?▼
What should the AG do if a policy is deposited but not assigned?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.