Insurance Companies to accept risk on an insurance policy only after receipt of premiums in advance :

Section 64VB prohibits insurance companies accepting a risk on an insurance policy without receiving the consideration (Premium) in advance. A risk can also be assumed based on a guaranteed provided e.g. Bank Guarantee, in accordance with the provisions of Insurance Rules. However, in terms of sub-section (2) of Section 64VB, in respect of risks where the premium can be ascertained in advance, the risk cannot be assumed earlier than the date on which the premium has been paid in cash or cheque to the insurer. Any refund of premium on account of a cancellation of a policy shall be paid by the insurance company directly to the life insured by a crossed account payee cheque or by postal money order and a proper receipt shall be obtained from the insured. In any case, refund to the account of the Agent is strictly prohibited. Further, where an insurance agent collects a premium on behalf of an insurer, the Agent is required to deposit the premium collected without deduction of his commission, within 24 hours of collection excluding bank and postal holidays.