Fixed guarantee on surrender value will hurt insurers’ investment freedom

The industry doesn’t seem to be keen on the proposed guaranteed surrendered value...

Providing customers superior return for their investment from their insurance policy, at the point of death, maturity or surrender, is the top priority when designing insurance products. A fair surrender value is integral to this philosophy.

We believe that on surrender, a client should get a fair reflection of what is owed to him at that point, recognising the premiums paid to date, expenses incurred, investment returns, the cost of insurance cover provided, etc. However, to provide a fixed guarantee at the outset on the amount of a surrender value, the insurance company will certainly need to constrain its investment freedom and this will limit the potential long-term gains for all policyholders.

How do you think the bancassurance guidelines proposed by Irda will help penetration of life insurance products?

This is a step in the right direction and will help insurance companies make further inroads. This will help companies pursue newer relationships with banks to widen their presence and achieve an optimal channel mix. Further, the proposed Bancassurance architecture guidelines will provide

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