Insurance News
Five things to remember while surrendering an insurance policy

21/11/2014 - 

If one closes an insurance policy, a surrender value—fund value minus surrender charge—is paid to the policyholder. Insurance companies prescribe a lock-in period, typically three years (five year for Ulips), before a policy can acquire a surrender value. Full premiums must be paid during this period. If a policy is surrendered before the end of the lockin period, surrender charge is deducted from the fund value. The surrender value is a percentage of the fund value depending on the period for which the premium has been paid. 

 

Request form : The policyholder must submit a filled and signed surrender request form, stating the policy number, name and contact details.

Other documents : The original policy document, bank account details, a cancelled cheque leaf of the account where the amount is be deposited and selfattested KYC documents must be submitted along with the form.

Reason for surrender : The insurance company will askfor the reason of surrender. One may state financial reasons, unsatisfactory returns or services, and buying of an alternate policy, among others.


Timeline : The request for surrender will be processed within seven working days after receipt of the request, if all requirements are fulfilled.

TDS : TDS will be applicable at 2% if valid PAN is provided, but it will increase to 20% in case valid PAN is not available with the insurance company.

Points to note : Once a policy is surrendered, it cannot be reinstated. Insurance companies may publish the surrender value of the policies periodically. A term policy has no savings component and, hence, no surrender value, loan or paid-up values are granted under these policies.

Four tips to get better returns from ULIPs using free switches

13/11/2014 - 

With equity markets on a new high and with an expectation for it to soar further, Unit Linked Insurance Plans, or, Ulips provide a cost-effective way of entering the equity market. They not only offer a professionally managed investment-cum-protection platform, but also provide an entry point into the growing equity market. Alongside equity, investments in highest rated debt instruments also make Ulips a perfect choice for investors who are looking for a long-term investment instrument that offers features like transparency and flexibility. 

Ulips offer an array of fund options with different asset allocations that meet the requirements of policyholders with different risk appetite. While leaving the fund management to experts may be the best option, some customers are particularly savvy and would like to monitor their fund movement. Ulips offer several options to customers in order to provide complete access to invest their premiums in well established suite of investment funds of Insurance companies, ranging from 100% debt to 100% equity. 

Online insurance sales to touch Rs 15,000 crore by 2020: Report

10/11/2014 - 

The insurance industry expects online sales to grow by around 20 times to Rs 15,000 crore by 2020, according to a study. 

"Digitalisation influence is quite high in the country with the Internet access is growing at a phenomenal pace and rising smart phone penetration. We are expecting sales in the insurance sector to grow by 20 times to Rs 15,000 crore by 2020 through the digital medium," Boston Consulting Group Principal Amit Kumar said, explaining the 'Insurance @Digital -20X by 2020' report. 

Online insurance sales market in India would be around Rs 3,500-Rs 6,000 crore for life insurance and Rs 11,000-Rs 15,000 crore for non-life insurance, the report said. 

The online insurance market is now is over Rs 700 crore, in which life insurance sales contributed Rs 300 crore, motor insurance around Rs 250 crore and other segments like health and travel make up for about Rs 150 crore. 

Even though online purchases are a small component of commercial activity today, it is growing rapidly, the report said, adding that the impact of digital sales would be felt beyond just online sales. 

It has been estimated that by 2020, three in every four insurance policies would be influenced by digital channels during either the pre-purchase stage, purchase or renewal stages, the report said. 
 
In insurance, term life plans and travel insurance have already picked up substantially in the last few years, the report said. 

The report explained that Google's Consumer Barometer 2013 showed that since 2008 search queries for motor insurance has grown six times, that of health insurance has grown by 4.5 times and life insurance queries have grown by 4.5 times.

IRDA imposes fine on Sahara Life, Aviva Life for norm violation

07/11/2014 - 

Insurance regulator IRDA has slapped penalty of Rs 25 lakh and Rs 5 lakh on Sahara Life and Aviva Life respectively for violation of regulations. 

For the year ending March 2014, Sahara India Life Insurance Company did not fulfil the social sector obligation and hence a penalty of Rs 25 lakh has been imposed on the company, Insurance Regulatory and Development Authority (IRDA) said in an order. 

The life insurer, in its ninth year of operation, had covered 16,174 lives as against the mandatory requirement of covering 45,000 lives under social sector obligations in the financial year 2013-14. 

The IRDA said that the company has failed to comply with the social sector obligation for the second consecutive year in 2013-14. 

As regards Aviva Life Insurance, the IRDA said the company has been violating not only certain regulatory provisions, but also the fundamental principles governing the contract of life insurance while underwriting or accepting the policies. 

The IRDA said it has imposed a fine of Rs 5 lakh for not obtaining proper approval of customers on certain issues including extra mortality rate charge. 

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