LatestLaws.

com

LIFE INSURANCE CORPORATION RULES, 1956

S.R.O. 1889A – In exercise of the powers conferred by section 48 of
the Life Insurance Corporation Act, 1956 (31 of 1956), the Central
Government hereby makes the following rules, namely:-

1. Short title – These Rules may be called the Life Insurance

Corporation Rules, 1956.
1
{2. Definitions- In these rules-
(i) “Act” means the Life Insurance Corporation Act, 1956(31 of
1956);
2
[(i-a) “Chairman” means the Chairman appointed by the Central
Government under sub-section (1) of section 4];
(ii) “Section” means a section of the Act;
(iii) “Tribunal” means the Tribunal constituted by the notification
of the Government of India in the Ministry of Finance
S.R.O. No.1734 dated the 25th May, 1957.}

3. Term of office of members-

1. An official member shall hold office during the pleasure of the
Central Government.
2. A non-official member shall hold office for a period of three2A
years unless a shorter period is specified in the order of
appointment.
3. An out-going member shall be eligible for re-appointment.
3
[3A Office of Chairman – The Office of the Chairman shall be whole-
time]

4. Resignation of members – The Chairman or any member may, by

writing under his hand addressed to the Central Government, resign
his office, and such resignation shall take effect from the date on
which it is accepted by the Central Government 4[or on the expiry of
thirty days from the date of resignation, whichever is earlier]

1
Subs. By G.S.R. 317 dated 30th April, 1958 ;
2
Ins. By G.S.R. 1094 dated 22nd July, 1965 ; 2A Subs by GSR 669(E) dated 26th October, 2006
3
Ins. By G.S.R. 317 dated 30th April, 1958
4
Ins. By G.S.R. 317 dated 30th April, 1958

1
 LatestLaws.com

5. Absence from meetings – Any member who absents himself from

three consecutive meetings of the Corporation without leave of the
Corporation shall cease to be a member thereof.

6. Removal of a member –
(1) The Central Government may remove any member, who, in the
opinion of that Government, has so flagrantly abused in any manner
his position as a member as to render his continuance as a member
detrimental to the public interest.

(2) No member shall be removed under sub-rule(1) unless he has

been given a reasonable opportunity of showing cause against his
removal.

7. Casual vacancies among members – In the event of the occurrence

of any vacancy in the office of a member by reason of his death,
resignation or removal, or otherwise, the Central Government may
appoint another person to act in his place.

8. Fees of members – A member not being a whole-time officer of the

Corporation or an officer of the Central Government shall be paid fees
by the Corporation as follows:-

a. for attending meetings of the Corporation – 5[Rs10000/- ]for each

meeting;
6
[b for attending meetings of any Committee constituted by the
Corporation-7{Rs.5000/-} for each meeting as well as for visit to
other places in connection with the affairs of the Corporation.]
8
[ xxxxxxx xxxxxxxx ]

5
Subs. By G.S.R. dated 3/1/2012 (Rs 100 changed to Rs 200 vide G.S.R. 1116(E) dated 2.12.1988,
changed again to Rs 500 vide G.S.R dated 28.5.1997 and changed to Rs 5000/- vide G.S.R. 474(E) dated
23/7/2004)
6
Sub. By G.S.R. 1116(E) date 2.12.1988
7
Subs. By G.S.R. dated 3/1/2012 (Rs 50 changed to Rs 100 vide G.S.R. 1116(E) dated 2.12.1988, changed
again to Rs 250 vide G.S.R dated 28.5.1997 and changed to Rs 5000/- G.S.R. 474(E) dated 23/7/2004)
8
Omitted by G.S.R. 1101 dated 8th November, 1958

2
 LatestLaws.com

9. Traveling and daily allowances –

(1) Every non-official member shall be entitled to-

(a) traveling allowances for journeys performed by him in

connection with the work of the Corporation at the rates
admissible to officers of the first grade in the service of the
Central Government;

Provided that every such member shall, when traveling by rail,

be entitled to travel by air-conditioned accommodation if such
accommodation is available.
9
[(b) (i) daily allowance as admissible to an Officer in the
highest grade of the Corporation; and

(ii) actual expenses of lodging charged by the hotel

other than a 5 star hotel and an amount at the rate not exceeding
the daily allowance specified in (i) as and by way of boarding
and incidental expenses.

Note: The total duration of tour for which halting expenses are
admissible shall be calculated from the actual time or
departure of the train or flight from the place of residence
of the Member by the last available train or flight up to
the time of the return thereto by the first available train or
flight after completion of official business.]

(2) The traveling and daily allowances of an official member shall

be governed by the rules applicable to him for journeys performed on
official duty; and in case such official member is not in the service of
the Corporation, the Corporation shall make necessary reimbursement
to the authority employing such official.

9
Sub. By G.S.R. 1116(E) dated 2.12.1988

3
 LatestLaws.com

10.Apportionment of provident fund etc.-

(1) where all the employees of an insurer whose controlled
business is transferred to and vested in the Corporation under section
7 do not become employees of the Corporation under section 11, all
the moneys and other assets belonging to the provident fund or
superannuation fund or any other like fund referred to in sub-section
(1) of section 8 shall be apportioned between the trustees of the fund
and the Corporation in the following manner, namely;-

(i) the moneys and other assets of any provident fund shall be
apportioned in the proportion which the total of the amounts
lying to the credit of the persons becoming employees of the
Corporation bears to the total of the amounts lying to the
credit of the persons who do not become employees of the
Corporation;

(ii) the moneys and other assets of any superannuation fund shall
be apportioned in the proportion which the liability of the
fund in respect of the persons becoming employees of the
Corporation bears to a similar liability in respect of the
persons who do not become employees of the Corporation,
such liability to be ascertained on such basis as may be
determined by the Corporation and approved by the Central
Government; and

(iii) the moneys and other assets of any other like fund shall be
apportioned in accordance with the principles set out in clause
(i) or clause (ii), as the case may be.

(2) The provisions of sub-rule (1) shall, so far as may be, apply in
relation to the valuation and apportionment of moneys and other
assets belonging to any provident fund or superannuation fund or any
other like fund referred to in clause (f) of sub-section (2) of section
10, as they apply in relation to the apportionment and valuation of
moneys and other assets belonging to a provident fund,
superannuation fund or any other like fund referred to in sub-section
(1) of section 8.

4
 LatestLaws.com

Explanation – For the purposes of this rule the assets of a

provident fund, superannuation fund or any other like fund shall be
valued at the market rate as on the appointed day.

11.Transfer of service of existing employees of chief agents-The

provisions of section 12 shall apply only in respect of the employees
of a chief agent of an insurer who was, under the terms of his contract
with the insurer, required to render the following services to the
policyholders, namely:-

(a) collection of premiums from the policyholders in respect of

policies secured through his insurance agents in the area for
which he was appointed chief agent; and
(b) issuing of final (pucka) receipts for the premiums so
collected.
10
[12. Reference to the Tribunal, etc.-

(1) where the amount of compensation offered under sub-

section (2) of section 16 is not acceptable to an insurer, or where the
compensation offered under section 36 is not acceptable to a chief
agent or a special agent, the insurer, the chief agent or the special
agent, as the case may be, for the purpose of having the matter
referred to the Tribunal, apply to the Corporation along with the
documents specified, if any, in this behalf by the Tribunal in
regulations made by it under section 17 (in this rule referred to as the
regulations)-

(a) In cases where the compensation was offered before the 1st
day of November, 1964, not later than the 31 st day of January,
1965 or, if the applicant is an insurer to whom compensation
is payable under Part B of the First Schedule to the Act, not
later than the 31st day of April, 1965;

(b) In all other cases within three months from the date on which
the compensation is offered, or, if the applicant is an insurer
to whom compensation is payable under Part B of the First

10
Sub. By G.S.R. 1568 dated 31st October, 1964

5
 LatestLaws.com

Schedule to the Act, within six months form the date on which
the compensation is offered.

(2) The Corporation shall within three months of the date of

receipt of an application under sub-rule (1) refer the matter to the
Tribunal for decision along with a written statement and other
documents specified, if any, by the Tribunal in the regulations.

(3) (i) Where an application under sub-rule (1) is made after the
expiry of the period specified therefore in that sub-rule, the
Corporation shall, notwithstanding the expiration of the said
period, refer the matter within three months of the date of receipt
of the application to the Tribunal for decision along with a written
statement and other documents specified, if any, in the regulations.

(ii)The Tribunal may admit a reference made under clause (i) if the
applicant satisfies the Tribunal that he had sufficient cause for not
making the application to the Corporation within the period
specified therefor in sub-rule (1).

(4) An application to the Tribunal under section 15, or a reference

to the Tribunal, other than a reference referred to in sub-rule (2) or
sub-rule (3), may be made-

(a) in cases, where the cause of action arose before the 1st day of
November, 1964, not later than 31st day of January, 1965,
(b) in all cases, within a period of three months from the date on
which the cause of action arose:

Provided that the Tribunal may admit an application or a reference

other than a reference referred to in sub-rule (2) or sub-rule (3) after the
expiry of the relevant period referred to in clause (a) or clause (b) if the
person making the application or reference satisfies the Tribunal that
there was sufficient cause for not making in within that period.]

6
 LatestLaws.com

11
[12A. Jurisdiction of Tribunal:- The Tribunal may exercise jurisdiction
in the whole of India and shall have power to decide or determine all
or any of the following matters, namely-
(i) any question whether of title or of liability or of any nature
whatsoever in relation to the assets and liabilities pertaining to
the controlled business of an insurer transferred to and vested in
the Corporation;

(ii) any question under section 10 or under any rules made there
under whether any property is or was held or used by a
composite insurer for the purposes of his controlled business;

(iii) every application made under section 15 and all claims

outstanding in respect of any transaction which may be the
subject matter of any such application determined in favour of
the Corporation;

(iv) all claims for compensation payable under the Act to insurers
whose controlled business has been transferred to and vested in
the Corporation; and all matters connected with the
determination, payment and distribution of such compensation;

(v) all claims for compensation payable under the Act to chief
agents or special agents for contracts terminated under section
36; and all matters connected with the determination, payment
and distribution of such compensation;

(vi) such supplemental, incidental or consequential matters which

the Tribunal may deem it expedient or necessary to decide or
determine for the purpose of securing that the jurisdiction
vested in it under the Act and in respect of matters referred to
above is fully and effectively exercised.]

13. Compensation – The compensation payable under the Act shall be

paid in cash.

11
Ins. By G.S.R. 317 dated 30th April, 1958

7
 LatestLaws.com

14. Employees and Agents Relations Committee – The representatives

of the Corporation on the Employees and Agents Relations
Committee constituted under sub-section (3) of section 22 of the Act
for each zonal office of the Corporation and the representatives of the
employees and agents on such Committee shall be nominated by the
Corporation.

15. Term of office of members of Employees and Agents Relations

Committee-A member of an Employees and Agents Relations
Committee shall hold office for a period of two years but shall be
eligible for being re-nominated.

16. Causal vacancies in Employees and Agents Relations Committee -

1. If any casual vacancy occurs in the office of a member of an
Employees and Agents Relations Committee by death or resignation
of such member or otherwise, the Corporation shall as soon as may be
after the occurrence of the vacancy take immediate steps to fill the
vacancy.

2. Every member appointed to fill a casual vacancy of such

Committee shall continue in office for the unexpired term of his
predecessor.

17. Report – The Annual Report to be submitted by the Corporation to

the Central Government under section 27 of the Act regarding its
activities during the previous financial year shall be in such form as
the Central Government may, from time to time, direct and shall inter-
alia contain particulars in respect of the following matters, namely;-

a. the extent of the new business;

b. the total amount of business in force;
c. the total amount of claims;
d. nature of investment; and
e. the accounts

8
 LatestLaws.com

18. Allocation of paid-up capital of composite insurer – For the

purposes of the Explanation to sub-section (2) of section 7 and of
clause (b) of sub-section (2) of section 10 of the Act, the part of the
paid-up capital, or assets representing such paid-up capital as the case
may be, allocated to the controlled business of an insurer shall be
determined in the manner following namely;-

(i) in respect of an insurer entitled to receive compensation under

Part A of the First Schedule to the Act, the paid-up capital
allocable to the controlled business shall be that proportion of
the total paid-up capital of the insurer which the annual average
of the profits from the controlled business during the period
covered by the relevant actuarial investigation bears to the total
of such annual average of profits plus two times the annual
average of the profits from other business during that period;

Provided that the paid-up capital so allocable to the controlled

business shall not in any case exceed a sum of Rs.6 lakhs.

(ii) in respect of an insurer entitled to compensation under Part B of

the First Schedule to the Act, the paid-up capital allocable to
the controlled business shall be the excess, if any, of the amount
of liabilities of the insurer appertaining to such business in
existence on the 19th day of January, 1956, computed as at that
date in accordance with the provisions of paragraph 4 of Part B
of the First Schedule to the Act over the value of the assets of
the insurer appertaining to his controlled business (excluding
the paid-up capital allocable to controlled business) in existence
on the 19th day of January, 1956 computed as at that date in
accordance with the provisions of paragraph 3 of Part B of the
First Schedule to the Act.

Explanation 1 – “Profits from controlled business” means the share of

the surplus allocated to the shareholders as disclosed in the abstracts
prepared in accordance with Part II of the Fourth Schedule to the
Insurance Act in respect of the relevant actuarial investigations.

Explanation 2 – “Profits from other business” means the total of the

Profits less losses transferred to “Profit and Loss Account” from the

9
 LatestLaws.com

fire, marine and miscellaneous Insurance revenue accounts prepared

in accordance with Form F of the Third Schedule to the Insurance
Act.

Explanation 3 – “Relevant Actuarial Investigations” means such

minimum number of latest actuarial investigations as it dates earlier
than the 1st day of January, 1956 (not being less than 2 in any case)
would leave the period intervening between the date as at which the
actuarial investigation immediately preceding the first of such
investigations was made and the date as at which the last of such
investigations was made to be not less than 4 years.

Explanation 4 – Where an insurer has allocated to shareholders more

than 5 per cent of any such surplus as is referred to in Explanation 1,
the insurer shall be deemed to have allocated only 5 per cent of the
surplus and where an insurer has not allocated any such surplus to
shareholders or has allocated to shareholders less than 5 per cent of
any such surplus the insurer shall be deemed to have allocated 5 per
cent of the surplus.

19. Transfer of business of certain composite insurers to the

Corporation –Every transfer by the Administrator under clause (a) of
section 45 of the Act shall be made in pursuance of an agreement
between the Administrator and the Corporation and no such
agreement shall be entered into except with the previous approval of
the Central Government.

20. Vesting of the management of the affairs of the insurer in the

persons entitled thereto-As soon as the transfer in terms of rule 19 is
effected, the Administrator shall by notice call upon the persons in
charge of the management of the insurer immediately prior to the
appointment of the Administrator to take charge of the management of
any other kind of business not transferred to and vested in the
Corporation and upon such notice being given, such persons shall take
the management of that other kind of business.

10