The correct answer is: B. With discontinuance of premium even after three years no surrender value is guaranteed.
A. As per law if the premium, for three years, it shall earn a guaranteed surrender value. This is correct. The Insurance Act, 1938, Section 39(2) states that “Every insurer shall, on the request of the insured, pay to him at any time after the expiry of three years from the date of commencement of the policy, a surrender value calculated in accordance with the rules and regulations framed by the insurer in this behalf.”
B. With discontinuance of premium even after three years no surrender value is guaranteed. This is incorrect. The surrender value is guaranteed only if the premium is paid for three years. If the premium is discontinued after three years, the surrender value may not be guaranteed.
C. The special revival of a lapsed policy is convenient both from the assured point of view and that of the insurer. This is correct. The special revival of a lapsed policy is convenient both from the assured point of view and that of the insurer. From the assured point of view, it allows him to revive his policy without having to pay the full premium. From the insurer’s point of view, it allows him to retain the assured as a customer.
D. The most important condition for a policy lapsed for a considerable length of time is evidence of insurable interest. This is incorrect. The most important condition for a policy lapsed for a considerable length of time is evidence of non-lapse. The assured must provide evidence that the policy has not lapsed due to non-payment of premium. This can be done by providing a bank statement or other documentary evidence.