Recently IRDA revamped so many changes when it comes to Life Insurance. All these changes will be effective from 1st October 2013 (Now IRDA extended it to 1st Jan 2014) . It is very important for all Life Insurance buyers to understand these changes well before going ahead for any buying.
Non Linked Regulations-
- Non Linked products like traditional life insurance policies will be classified as “PARTICIPATING PRODUCTS OR “PAR PRODUCTS” and NON-PARTICIPATING PRODUCTS OR “NON-PAR PRODUCTS” .
- PAR PRODUCTS will be eligible for Bonus on annual basis + Interim Bonus + Final Additional Bonus.
- Minimum Death Benefit will be A) For Single Premium it is 125% for age up to 45 years, 110% for others. B) For Non Single Premium it is minimum 10 times of the annualized premium (for age up to 45 years), for the rest it is 7 times of annualized premium.
- For Non Single Premium it is minimum 10 times of the annualized premium (for age up to 45 years), for the rest it is 7 times of annualized premium.
- The minimum policy term will be 5 years and minimum premium paying term for non single premium policies will be more than 5 years.
- Guaranteed Surrender Value (for regular premium policies) will be as below. A) 30% of premium paid less any survival benefit already paid, if surrendered within 2nd Or 3rd Year. B) 50% of premium paid less any survival benefit already paid, if surrendered within 4th To 7th Year. C) 90% of premium paid less any survival benefit already paid, if surrendered in the last 2 years of policy , if term of the policy is less than 7 years.
- Premiums will be equal throughout the period of the policy.
- One can pay their premium only 30 days before the date of premium due. This move has both negative and positive effects. Negative effects are like if your employer ask you submit investment proof before 31st January of FY and your Life Insurance premium is due by 1st March then you are unable to produce it buy paying advance. So you need to ask for the TDS done from your employer afterward. Earlier to this, there was a provision to pay the advance premium and avail discount on this. Agents used to woo policy holders to pay advance payment and have a discount on this. Reason is, they will get a handsome commission immediately.
- For monthly premium payment mode only during the start of policy insurance company may accept 3 months advance payment.
- Service tax will be collected over and above the contractual premium. Now there will be a clear idea about how much you are paying as tax and how much will go towards premium. So this move will actually bring transparency.
- Selling of same plan and same tenure by splitting plans will not be allowed henceforth. It means from now onward your agent will not be able to sell the one product with same tenure by splitting Sum Assured (which increases his number of policy count but cumbersome for policy holders to maintain the data.) Like Jeevan Anand with tenure of 20 years can not be split like 5 policies of each SA Rs.5,00,000. Instead you have to buy only one Jeevan Anand for tenure of 20 years and SA Rs.25,00,000. But your agent can sell with different terms.
- Existing plans of insurance companies will be revamped to suit the new regulations. Hence plans of LIC’s Jeevan Anand or Jeevan Tarang may come out with new features.
- Policies sold during the transition period (from 20th Feb 2013 to 1st Oct 2013) will have the option either to have continued their policies with existing features or move to new features.
- Your premiums will come down drastically as from now onward new mortality table will be referred to fix insurance premium. Especially LIC which is using the 1994-96 Ultimate Mortality Rates will move to IRDA’s Indian Assured Lives Mortality (2006-08).
- The agents commission structure was revamped. Details of the same will be available in my recent post “Do you know your life insurance agents commission?“.
- The product literature must indicate whether the policy is protection oriented or saving orientd.
- Benefit illustration like guaranteed and non guaranteed at gross investment returns of 4% and 8% respectively signed by both prospective policyholder and agent. It must form the part of the policy document.
Buying Life Insurance By moolanomy, CC-BY-SA-2.0.
Linked Regulations–
- Death Benefit will be either of below. A) The Sum Assured as agreed in the policy plus the balance unit of fund. B) Higher of Sum Assured or balance unit of a fund.
- But the minimum maturity value should be equal to the value of units available on maturity date.
- Minimum Death Benefit will be as below. A) For single premium 125% of premium paid (if age at entry is under 45 years) or 110% of premium paid (if age at entry is above 45 years). B) For regular premiums 10 times of annualized premiums or 0.5 * Term of the Policy * annual premium whichever is higher (if age at entry is under 45 years). Else 7 times of annualized premiums or 0.5 * Term of the policy * annual premium whichever is higher (if age at entry is above 45 years).
- Single premium health insurance products will not be available from now onward.
- In case of death within 12 months of the start of the policy or from the date of revival of the policy then nominee will be entitled for fund value available on the date of death.
- For policies issued for minors the date of commencement of policy and risk commencement will be same.
- At any point of time death benefit will not be less than 105% of total premiums paid including top up but excluding service tax.
- Minimum policy term will be 5 years and premium payment will be 5 years.
- Grace period will be 15 days monthly premium paying and 30 days for in all other cases.
- Lock in period will be 5 years.
- If policies discontinued within 5 years then they can revive the policies within two years or complete withdrawal without any risk.
- Partial withdrawal will be available after 5 years only. But for child policies one can not withdraw until minor insured attained the age of 18 years.
- Benefit illustration like guaranteed and non guaranteed at gross investment returns of 4% and 8% respectively signed by both prospective policyholder and agent. It must form the part of the policy document.
- Loan will not be available under linked products.
- Heighest NAV Guaranteed Plans are not allowed to operate.
- Closed ended funds are not allowed to operate.
- One can pay their premium only 30 days before the date of premium due and 3 months for monthly premium payment schedule.
- Splitting of policies will not be allowed in the case of linked policies.
- Same day NAV will be applicable if the premium received or redemption request received within 3 P.M. Else next day NAV will be applicable.
- Yearly statement will be sent showing the charges and the current fund values.
These are the major points which one must know. The list is big to go by, but I mentioned the major changes one most know.
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Hi Sir,
My father passed away leaving unknown investments in shares which were in physical form and insurance policies he might have held during his entire life time. Is there any way I can get information of all his investments just by his name and other details
Certificates and money everything has gone missing from his house in which he resided due to thefts and lifters whoever might have visited the house in our absence cause lot of things in the house have gone missing.
Can I get a response from SEBI regarding physical shares if he held with the above mentioned details, I am his son and have one sister alongwith my mother left in our family.
Please guide me in this matter what can I do. I am only available to followup and enquire wherein there are papers on e-voting or allotment advice letter or some kind of board of meetings of the company wherein every company mentions details about folio numbers and number of units held in stocks. Besides that no certificates are located in physical form.
However, we could recover everything from his Demat accounts but have no idea on physical form of stocks since there was a theft in our house during the period of his death when he was hospitalised and his house remained opened unattended. Even, we did not visit his house till he passed away as we stayed in the hospital every nights.
Looking forward to any kind of help or useful information you can share through your experiences in these investment market.
Can SEBI or IRDA or any company working on such finding lost investment details of the deceased holder.
Best Regards
Rajesh
Dear Rajesh,
First of all sorry for your father's sudden demise. Please don't share your personal details on such public platforms. Hence, I have edited your comment by removing the personal information you have shared while commenting.
Coming back to your issue, you can communicate with the companies whose communication documents are available with you. SEBI can't do much here. Regarding the insurance, I strongly suggest you to contact individual companies and provide your father's details to find if he was holding any insurance.
I have read lot of literature on term insurance, but nowhere the eligibillity for getting the same is not shown any where. can a common man whose annual income is around 2 lakhs or below, get term policy for 1 crore with premium of Rs.6000 p a. I am telling this because when I approached a
company they say only professionals can opt with IT returns Etc. I think this is nothing but discrimination and violation of fundamental rights of individual. I am sure even IRDA has no such restrictions.can u help me ?
Dear Shridhar,
I hope you did not understand the concept of Life Insurance. Do you feel a person whose yearly income is Rs.2 lakh or less than that will incur a FINANCIAL LOSS of Rs.1 Cr if he is not there? The concept of Life Insurance depends on HUMAN LIFE VALUE. Otherwise, Rs.2 lakh earning person may opt for Rs.1 Cr and Rs.20 lakh earning person may opt for Rs.20 Cr. Life Insurance concept not work in this way.
Sir I passed recently irda exam and iam joinedas kotak agent is it possible to take Lic agent also or we have to pass one more exam
Dear Srilatha,
As per my knowledge, you can't be an agent of two life insurance companies at the same time (as an individual agent).
Sir I have purchased my kevan surksha plan from pnb MetLife with 20 years term. It is a life protection plan and I have paid only one premium and next is due in March 2019. I requested pnbmetlife to convert it to guaranteed life product plan.but they refused . Is there any IRDA regulation for converting whole life protection plan to limited plan or short term pla.
Dear Malik,
They are right and you can't convert from one product to another product.
Sir,
"Total amount of insurance sold during the year" and "total sum assured during the year " are same in meaning or not?
Dear Priyanka,
First one is numbers and second one is Sum Assured.
I would like to ask you few questions about the term plan. I am planning to take the Insurance cover of 4.2 CR for 74 Yrs where by salary is 20 L PA (I hope i am eligible to take that amount ) my age is 37 and i work abroad i am a NRE. I have shortlisted HDFC
1) I am confused if i should go for lump sum plan or Return of investment plan ?
2) What is the average Claim settlement time taken for insurance companies normal to settle the claims ?
Can you share your taught ?
Dear prasad,
1) Lump sum payment to nominee at death is best.
2) Hard to say as it depends on case to case.
Dear Sir,
Some of the companies provide riders like
waiver of Premium on Critical illness
waiver of Premium
Early claim on Terminal illness
Accidental Disability
Should we go for it ? or it is better to go with plain Term insurance ? Can you share your taughts and views on this ?
Dear Prasad,
It is better to go with plain term life insurance.
Respected Sir, One of my friends had taken Housing Loan from HDFC. They had issued a Policy through HDFC ERGO Insurance Company(which is a General Insurance Company. Actually this policy was selected by the HDFC only as most suitable for the borrower(without explaining the contents to the Insured). The Policy term was only for five years for which period the entire premium was deducted at the commencement. It was observed that no where in the policy, the scope of cover and/or benefits were mentioned. It only says major medical illness and procedures,without mentioning whether it is a hospitalisation expenses reimbursement policy or Life Insurance Policy. The Insured, my fried passed away recently, after some heart problem. My friend's wife preferred a death claim on the HDFC ERGO General Insurance Company.
The Insurance Company has rejected the claim for the reason "The said ailments are not covered under the policy hence the claim is rejected:
Now My questions are (1) Whether a General Insurance Company can issue a policy covering natural death (2) Whether an Insurance Company covering life or health, has a right to cover only selected health problems? Sir I am in the Insurance field for the past 49 years and according to me it is not permitted. In All other General Insurance Companies , Health Insurance Policies cover all diseases excluding Pre- Existing Diseases for specific period. But the Home Suraksha Policy issued by HDFC ERGO defies these norms. Please clarify and guide me
Venkata-First understand the basics that HDFC ERGO is not a life insurance. But the death of your friend might be covered in that policy if it is an ACCIDENTAL POLICY and that also death occurred due to an accident. However, in your friend's case, it has not happened.
1) NO.
2) YES, in all policies there are some exclusions involved.
First, approach any branch of HDFC ERGO and try to understand the policy feature. Then you will come to know.
Dear Sir,
I am planning to take Axix Max Life Forever Young Pension Plan and I have been advised to pay Rs 3 Lakhs per annum for 5 Years even though the minimum policy term is 10 Years.As per the agent after 5 years of premium payment I can continue the plan as a Paid Up Policy.Is it advisable to go ahead ? Will I get all the benefits of a normal plan even If I make it as a Paid up policy.
Regards,
Aneesh Kumar.M
Aneesh-Try to avoid any products which are meant for PENSION or RETIREMENT.
Hi Basavaraj,
Do you have any reasons to avoid these type of products and what is your suggestion for some retirement plans for a person like me who's working abroad now.
Aneesh-The issues are like LIQUIDITY, TAX ISSUES, NO PAST RECORD and no control over your money.
Dear Sir,
I took a loan from Tata Capital for 15 years and they book a Life and Health Insurance Policy in Tata AIG for 15 years for Rs.146000, i took this poilcy in October-2015 and in July-2017 i cancelled the policy after making full payment of Loan, now they have refund me only 11% of Premium. Is it correct refund policy.
Arun-It may be as they might have calculated the surrender value. Check with them as I dont' have much details about product and policy details.
Thanks very much for your reply, but never send me Policy Document , now they have send which is as below,
can you see and tell what exactly it means as i am unable to understand it.
Year of Cancellation Policy Period Years
2 3
Year 1 25% 45%
Year 2 11%
Arun-Without policy document how the processed your surrender?
Actually this policy is against Loan , so they keep original policy with them, and issued me only receipt and other basic details. I think this is due to this money goes to them in case of any mishappening with me. Its not my insurance actually this is risk coverage for banks. But i am also surprised why dont they send a copy to me too.
Anyhow sir, can you tell me how i can make a complain to IRDA regarding refund of premium, because any Banking or Insurance company can not make their own rule of refund or charges, they have to comply with IRDA or RBI. So i think i can take action, but i dont know the procedure to file complaint with IRDA.
Arun-Check and first discuss on what basis they surrendered. Let them show the reasons (in writing or email). Based on that you can take forward the case with Ombudsman.
Dear Sir ,
I have taken home loan from Indiabulls for a sum of rupees 2500000 in the month of august 2016. But they bundle it HDFC life home loan protection insurance plan for Rs,76688(home equity)along with the housing loan though the EMI of hlpp premium I.e Rs.710 is paying by me separately. I made a letter to branch head of INDIBULLS regarding termination of policy. However the branch head of indiabulls has not given any reply so far. I did not pay the semi of this month. I want your expert advise for cancellation of the same
Suresh-Raise the issue with RBI or Ombudsman.