In Brief
The appellant took a life insurance policy in 1993 with a 25-year term for Rs 75,000. After paying premiums for about 8 years, he took a loan against the policy and stopped paying premiums. The Life Insurance Corporation offered a low surrender value after deducting the loan. The appellant claimed he deserved the full bonus accrued. The Supreme Court upheld the insurer's calculation, holding that surrender value must be calculated using an approved actuarial factor applied to the paid-up value including vested bonus—not the full bonus that would have accrued had the policy matured. The Court explained that in life insurance, surrender value reflects only the policyholder's share of accumulated reserves, not total premiums paid.
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