Section 56 of IA : Section 56: Application Of Surplus Assets Of Life Insurance Fund In Liquidation Or Insolvency
IA
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Explanation using Example
Let's say "SafeLife Insurance Co." is undergoing liquidation. According to Section 56 of the Insurance Act, 1938, the company must calculate the value of its assets and liabilities related to life insurance separately from its other business activities. For instance, if SafeLife also sold property insurance, the money and property from the life insurance side cannot be used to pay off debts from the property insurance side, unless the life insurance assets are more than enough to cover the life insurance debts.
If, after doing the math, SafeLife finds it has extr...
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