Life Insurance Policies
The auditor should inspect the policies and see whether they are assigned to the bank and whether such assignment has been registered with the insurer. The auditor should also examine whether premium has been paid on the policies and whether they are in force. Certificate regarding surrender value obtained from the insurer should be examined. The auditor should particularly see that if such surrender value is subject to payment of certain premia, the amount of such premia has been deducted from the surrender value.
It should be verified whether the policies are assignable in bank’s favour. In certain types of policies, the assignment to third party are restricted.