Life insurance policies: Turning a new leaf

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SummaryWith Irda’s guidelines kicking in, all new life insurance policies will come with added benefits.

with the policyholders

* All traditional products will have a higher death cover

* For regular premium policies, the cover will be 10 times the annualised premium paid for those below 45 and seven times for others

* For all Ulips, companies will have to inform policyholders about the reduction in yield of their products on a monthly basis. Also, under the new norms, all variable insurance plans will guarantee a certain minimum rate of return at the beginning of the policy

* All variable insurance products will be treated at par with Ulips and these products will also follow the same commission package currently applicable for Ulips

* The new norms have reduced the commission on short-term policies and linked the quantity of commissions to the premium paying period for all products.

* For Ulips, the lock-in period will continue to be five consecutive years from the date of commencement of the policy

* For pension products, companies will have to offer insurance cover throughout the deferment period or offer riders

* The sum of all rider premiums attached to the pension product cannot exceed 15% of the premium paid for the pension policy

* Such rider premiums will be separately accounted for and cannot be included in arriving at the assured benefit.

To revive a discontinued policy, the insurer will collect all due and unpaid premiums without charging any interest or fee

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