Trading of Life Insurance Policy in Indian Insurance Market: Legal Implications

In this paper several aspects revolving around the legality of trading of life insurance policies have been considered with respect to Indian scenario. India though wanting to protect the social security of the policy holders fails to equally consider their financial security and development. India may not have a social security program in place however making this an excuse to restrict itself from playing at par with the global market seems like a heavy price to pay in the long term. S. 38 of the Life Insurance Act of 1938 allowed for the free and unrestricted transfer or assignment of life insurance policies. However, this is no longer permitted following the 2015 amendment. Due to it being a personal contract, restrictions have been imposed on the transfer or assignment of life insurance policies, with covered rights being non-transferable in nature with respect to trading purposes. India is currently in a particularly fortunate position, since most international businesses view it as the most trustworthy emerging market and it must take advantage of this opportunity. When investment insights are applied to life insurance, it benefits both the insured and the insurer because when the product price in the secondary market rises, its value in the primary market rises as well. Western secondary markets have been legalized and are regularly codified, leading in significant development and profitability. Customers benefit through establishment of a vibrant secondary market, but so do a variety of insurance providers and organizations. If deliberate action and legislative steps are adopted, India can achieve great feats in life insurance sector through developing secondary markets.