Acquisition of surrender value by policy
Section 113 of the Insurance Act, 1938 deals with acquisition of surrender value by policy. A policy of life insurance shall acquire surrender value as per the norms specified by the regulations. The Act came into force on 01 Jul 1939.
1[113. Acquisition of surrender value by policy. --(1) A policy of life insurance shall acquire surrender value as per the norms specified by the regulations.
(2) Every policy of life insurance shall contain the formula as approved by the Authority for calculation of guaranteed surrender value of the policy.
(3) Notwithstanding any contract to the contrary, a policy of life insurance under a non-linked plan which has acquired a surrender value shall not lapse by reason of non-payment of further premiums but shall be kept in force to the extent of paid-up sum insured, calculated by means of a formula as approved by the Authority and contained in the policy and the reversionary bonuses that have already been attached to the policy:
Provided that a policy of life insurance under a linked plan shall be kept in force in the manner as may be specified by the regulations.
(4) The provisions of sub-section (3) shall not apply--
(i) where the paid-up sum insured by a policy, inclusive of attached bonuses, is less than the amount specified by the Authority or takes the form of annuity of amount less than the amount specified by the Authority; or
(ii) when the parties, after the default has occurred in payment of the premium, agree in writing to other arrangement.]
Section 113, The Insurance Act, 1938 (Act 4 of 1938).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Referred to by 1
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Anandrao Ramchanda Salunke vs Life Insurance Corporation of India
Court's Decision & Legal Precedent
The surrender value of a subsisting bonus in a life insurance policy is not the full bonus amount but rather the bonus calculated at the approved surrender value factor. When a policyholder surrenders a policy before maturity, they are entitled only to the surrender value of the bonus (calculated using the approved actuarial surrender value factor) added to the guaranteed surrender value of the premiums paid, not the full bonus that would have accrued had the policy continued to its full term. The computation must follow the method approved by the competent authority under Section 113 of the Insurance Act, 1938.
On this section: Section 113 governs the acquisition of surrender value by life insurance policies. The Court analyzed the pre-amended version (applicable at the material time) which requires that a policy acquiring surrender value must add the surrender value of any subsisting bonus already attached to the policy. The Court held that 'surrender value of bonus' means the bonus calculated at the surrender value factor, not the full bonus amount.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 113
What have the courts held on Section 113 of the Insurance Act?
Anandrao Ramchanda Salunke vs Life Insurance Corporation of India (07 Mar 2019) is the leading judgment on this section among those set out below: Section 113 governs the acquisition of surrender value by life insurance policies. The Court analyzed the pre-amended version (applicable at the material time) which requires that a policy acquiring surrender value must add the surrender value of any subsisting bonus already attached to the policy. The Court held that 'surrender value of bonus' means the bonus calculated at the surrender value factor, not the full bonus amount.
How do I find court cases under Section 113 of the Insurance Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insurance Act 1938 113, section 113 Insurance Act 1938, section 113 of the Insurance Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Anandrao Ramchanda Salunke vs Life Insurance Corporation of India (07 Mar 2019).
What should I read with Section 113 of the Insurance Act, and has it changed?
1 other provision in this corpus refers back to it.
When did Section 113 of the Insurance Act come into force?
Section 113 of the Insurance Act, cited as Insurance Act 1938 113, came into force on 01 Jul 1939, having been enacted on 26 Feb 1938. It is in force as at the date shown on this page.
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Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 17 Oct 2026. This page is not a substitute for legal advice.