Acquisition of surrender values policy
113. [(1) A policy of life insurance under which the whole of the benefits become payable either on, or at a fixed interval or intervals after, the occurrence of a contingency which is bound to occur shall, if all premiums have been paid,-
(a) in the case of a policy issued by an insurer, for at least two consecutive years, and
(b) in the case of a policy issued by a provident society as defined in section 65, for at least five consecutive years,
acquire a guaranteed surrender value which shall not be less than the minimum guaranteed surrender value prescribed in respect of such policy.
(1A) In prescribing the minimum guaranteed surrender value for the purpose of sub-section (1), regard shall be had to the term of the policy and the contingency on the occurrence of which the benefits become payable.
(1B) Every insurer and every provident society shall within a period of one year-
(a) in the case of an insurer or society transacting business immediately before the commencement of the Insurance (Amendment) Ordinance, 1970, from such commencement, and
(b) in the case of an insurer or society registered after such commencement, from such registration,
submit to the Chief Controller of Insurance for his approval, a statement showing the basis and formula on which the guaranteed surrender value of the policies issued by such insurer or society is determined; and the Chief Controller of Insurance, before according his approval, may, after giving the insurer or the provident society an opportunity of being heard, direct such modifications to be made in the basis and formula as he may deem fit.
(1C) No basis and formula approved under sub-section (1B) shall be modified without the previous approval in writing of the Chief Controller.]
(2) Notwithstanding any contract to the contrary and subject to any option exercised by the policy-holder under section 50A, a policy which has acquired a surrender value shall not lapse by reason of the non-payment of further premiums but shall be kept alive to the extent of the paid-up sum insured, and the paid-up sum insured shall for the purposes of this sub-section include in full all subsisting reversionary bonuses that have already attached to the policy, and shall, where the policy is one on which the maximum number of annual premiums payable is fixed and the premiums are of uniform amount, be before the inclusion of such bonuses not less than the amount bearing to the total sum insured by the policy exclusive of bonuses the same proportion as the total period for which premiums have already been paid bears to the maximum period for which premiums were originally payable.
(3) A policy kept alive to the extent of the paid-up sum insured under sub-section (2) shall not be entitled by virtue of that sub-section to participate in any profits declared distributable after the conversion of the policy into a paid-up policy.
(4) Sub-section (2) and sub-section (3) shall not apply,-
(a) where the paid-up sum insured by a policy, being a policy issued by an insurer, is less than one hundred Taka inclusive of any attached bonus, or takes the form of any annuity of less than twenty-five Taka, or where the paid-up sum insured by a policy, being a policy issued by a provident society as defined in Part III, is less than fifty Taka inclusive of any attached bonus or takes the form of an annuity of less than twenty-five Taka, or
(b) where the parties after the default has occurred in the payment of the premium agree in writing to some other arrangement, or
(c) to policies in which the surrender value is automatically applied under the terms of the contract to maintaining the policy in force after its lapse through non-payment of premium.