Most of you may be aware that the insurance regulator - Insurance Regulatory and Development Authority (IRDA) is busy undertaking policy changes which are meant to be in the interests’ of the policyholder. Right from rejigging the ULIPs, to bringing in measures to increase the life cover in life insurance policies, the IRDA has given due attention to its regulatory role.

In its recent policy changes, the IRDA had discouraged the use of single premium, or limited premium, payment term polices, as these could hit the cash flow management of companies. Accordingly, it proposed that all polices should have a regular payment option, equivalent to the term of the policy. Single-premium polices might be issued only under special categories, it said.

But within three months of the above directive, the IRDA suddenly changed its view about the single premium policies and has now decided to allow insurers to sell such policies after threatening to halt them earlier, citing high risk. It is noteworthy that, the regulator and the industry have been debating about the merits of single-premium policies. The regulator believes that insurers expose themselves to claims when such policies don't lead to recurrent incomes. But the industry maintains that these are not disproportionate to the overall business and there is a big market (constituting more than 45% of the total premium income) for them which is vital for the profitability of insurers.

 

Our view:

In our opinion it is commendable that the changes in the past brought about by the IRDA are in the interests’ of the policyholders as well as in the interest of the insurance industry. However, before finalising any policy changes which may have a major impact on policyholders or the insurance industry, the IRDA should discuss the same with the insurers and consider their valuable suggestions in finalising any policy change. It would be prudent to have some kind of representation of the policyholders in such discussions.

Policy changes should not be done in an abrupt manner or in a haste which eventually results in re-tuning the policy changes.

What should be the approach of policyholders…

Policyholders should think twice before falling prey to false promises of the agent or taking decision based on emotions. While buying insurance policy, whether it is a single premium or regular premium one, policyholders should make sure whether sufficient life cover is being provided by the policy under consideration and whether the premium paid to avail such life cover is appropriate and not exorbitant.

 

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jjudy1996tw@yahoo.com.tw Jun 17, 2012 Now a days Tata AIG, ICICI Prudential, BajajAllianze & such other life insurars are dilanypisg advertisement regarding Health Insurance seem irritable. Persons having heart trouble may have grat problem seeing the add. save your heart from attack, save yourself from stroke and such other. I think IRDA have not shown any interest in public health after seeing or reading such adds.I wish to draw your kind attention towards such adds & Insurance companies.
jbshah49@gmail.com May 04, 2012 why people should have "SINGLE PREMIUM POLICY"???????, if proper life cover is not there....How can you say it a LIFE COVER policy....In this type of polices LIFE cover is subordinate & big premium is important at cheapest cost to insurance co.....agents are also not rewarded for this type of polices.....insurance co.s are enjoying regular income by way of different charges, by deducting appropriate units every month.for different type of facilities & covers offered....insureds are not aware of all this facts....no one agent is focusing on this part & make it clear to insured about this fact....ultimately when insured comes to know all about this facts, it is too late for him to withdraw application OR get canceled the policy in stipulated time limit....Insured is plugged in for locking period, with no option to withdraw him self before completion of locking period..i.e. 5 years [as on today]...ultimately he suffers loss of capital & returns on investment...in many cases..I have observed.....because it is linked with NAV........If this type of polices are offered with GUARANTEED RETURNS...then it is good...ultimately insureds will be happy with even little less returns awarded to them......

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