Summary
The Supreme Court upheld LIC’s surrender-value calculation under the pre-amendment Section 113 and the policy terms. The policyholder was entitled to the surrender value of the vested bonus, not its full value as if the policy continued. The approved actuarial factor could apply to the paid-up value including bonus before deduction of the policy loan and interest.
Issues
- Whether the insurer lawfully applied a surrender-value factor to the vested bonus as well as the paid-up component.
Provisions considered
- Section 113(1), before the 2014-effective amendment, Insurance Act, 1938The statute required addition of the surrender value of the attached bonus, not payment of the entire vested-bonus figure; its provisos addressed approved formulas and disclosure. (¶¶ 5, 15–20)
Held
- Surrender value is not a refund of all premiums or the full maturity benefit. It reflects the relevant reserve and the approved actuarial basis for early termination. (¶ 11–14)
- The statute and policy condition required the cash surrender value of the attached bonus. The policyholder could not demand the whole bonus as though the policy had run its full term. (¶¶ 15–16, 18–19)
- The 32.92% factor was supported by the actuarial table and accepted approval. Applying it to paid-up value plus vested bonus, then deducting the outstanding loan and interest, complied with the governing provision and policy. (¶ 17–20)
Result
Appeal dismissed; National Commission decision sustaining LIC’s surrender-value computation left standing. No order as to costs.