New guidelines from IRDA
for life insurance and general insurance product
In last few days, The Insurance Regulatory and Development
Authority (IRDA) has issued some important guideline to life insurer and non
life insurer. According to new guidelines for traditional product, non-linked
variable insurance products (index-linked products) to be treated at par with
unit-linked products (Ulips). The insurers have been given time till June 30
2013 and September 30, 2013 to re-file their group and individual products respectively.
Guideline for Commissions:
The cap for first year commissions has been put
at 15% for the first year for a 5 year term, 30% for 10 years and 35% for 12
years or more. The insurer in industry less than 10 year this cap would be 40%.
In the case of polices are procured by direct marketing, there would be no
commission allowed. According to new guideline the shareholders will get at 10%
of the surplus and the policyholders would be entitled to 90% share of the
surplus.
Guideline for surrender
value:
The minimum guaranteed surrender value would be
30% of the total premiums paid less any survival benefits paid, if policy is
surrendered in the second and third year. If surrendered in the fourth year, it
would be 70% of the total premiums paid less any survival benefits already paid.
If surrendered during the fifth to the seventh policy year, it would be 90% of
total premiums paid, less any survival benefits already paid.
Guideline for death
benefit:
According to new guidelines for death benefit Irda said the minimum death benefit at highest of 125% of the single premium or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, for single premium products. For other products, it will be highest of 10 times the annualised premium or 105% of all premiums paid on date on death, or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death.
Norms for pension
product:
For pension products, it said that upon surrender of pension products, one-third can be commuted and balance can be received only as annuity upon superannuation with the same insurer. The same option is available upon vesting with additional option of extension of deferment period if aged less than 55 on vesting.
New norms for health
insurance:
IRDA has allowed to general insurance companies to
launch 3 year health insurance policies. Now insurer cannot refuse the renewal
without any sufficient reason. Longer period health insurance is good for customer
as till 3 year renewal done automatic and also get the cheaper premium than
current they are paying.
If you have any other query related investment
and financial planning feel free to ask.
Regards,
Arvind Trivedi
Certified Financial Planner
