IRDA’s Term Insurance Guidelines Helps Policy Holders

The Economic Times, on January 16, 2015, published detailed positive news for many online life insurance policy holders and applicants. According to the article, policyholders can expect a reduction on their premiums in the near future. This could be anywhere between 10% and 15% of the existing premium amount. This change is in sync with the Insurance Regulatory and Development Authority’s (IRDA) revised guidelines regarding dematerialisation and repositories.

The IRDA was constituted with the aim to standardize and regulate the insurance segment in India. The regulatory body has put forth regulations and guidelines for all types of insurance, including whole life and term insurance plans. A key part of the IRDA’s role is to protect the rights and interests of policyholders.

Highlights of the IRDAs Rules to Aid Life Cover Holders

The IRDA brought in some changes in 2013, to be made effective from January 1, 2014. These new guidelines are said to be more transparent and customer-centric. The major changes are with regards to the life insurance sector, especially in standard policies like endowment, money-back, ULIPs and term insurance plans.

1	A Long Term Perspective : The new guidelines urge customers to look at insurance products for long term gains. To this end, the minimum period for which premium is payable for non-linked variable products has been set at five years.
2	Guaranteed Capital Return: Variable insurance products will come with a certain rate of guaranteed return. This is decided when the customer chooses their plan. So, effectively, they will be able to decide if the policy fits their needs at a very early stage. In case they find that it is not profitable enough, they can make a switch to another plan.
3	Surrender Value: Although we plan to hold our policy until maturity, it might not always work out. In case you need to withdraw the plan midway, you may need an optimum surrender value. The new guidelines provides for this, if certain conditions are fulfilled. For instance, if you have a term insurance policy with a maturity benefit raider, for a period more than ten years; then you are eligible to the surrender value after paying premium for three years. Such a provision can prove to be very advantageous to the consumer, especially in situations requiring high liquidity.
4	Death Benefits: The IRDA guidelines specifies that the minimum value of the sum assured on a life plan will have to be ten times the value of the annual premium, in case of individuals below the age of 45. For those above 45 years, death benefits or the sum assured should be seven times the value of the agreed annual premium. Also, at any given incidence, the benefit should be no less than 105% of the cumulative premiums paid till date.

BEWARE OF SPURIOUS PHONE CALLS AND FICTITIOUS/FRAUDULENT OFFERS. IRDAI clarifies to public that • IRDAI or its officials do not involve in activities like sale of any kind of insurance or financial products nor invest premiums. • IRDAI does not announce any bonus. Public receiving such phone calls are requested to lodge a police complaint along with details of phone call, number.

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*For a healthy non-smoker male 25 years old with a policy term of 20 years, level cover option, paying Rs. 6,360 as annual premium without service tax for a sum assured of Rs. 1 cr. (Premium for one day = Annual Premium / No of days in a year = Rs. 6,360 / 365 = Rs.17.43 - Rs. 18.00 approximately). Premium mentioned above is indicative and might change subject to underwriting. Premiums can be paid only in Annual Mode of Premium Payment. #For the Premium paid on Life Insurance of Rs. 1.5 lakhs, save tax upto Rs. 51, 912/- (Assuming highest tax bracket applicable for an individual and subject to provision of Income Tax Act, 1961.) No medicals required for a cover up to Rs. 75 lakhs for the age upto 40 years. No medical underwriting if no adverse declaration is made in the proposal form by the policyholder.

For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Tax benefits, are as per the Income Tax laws & are subject to change from time to time. Please consult your tax advisor for details. Trade logo displayed above belongs to State Bank of India and is used by SBI Life under license. SBI Life - eShield, UIN: 111N089V01, a non-participating pure term insurance plan. Registered & Corporate Office: SBI Life Insurance Co. Ltd, Natraj, M.V. Road & Western Express Highway Junction, Andheri (East), Mumbai - 400 069. IRDAI Registration no. 111. CIN: U99999MH2000PLC129113. www.sbilife.co.in

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