Individual Health Insurance Blog

The grimy tricks departments in life insurance firms are demanding at work to beat the original regulations for unit-linked insurance policy issued by the supervisor, capping the various charges that they can charge on policyholders.

A senior industry official said that as per the latest guidelines issued by the IRDA (Insurance Regulatory and Development Authority), the maximum first-year commission that can be paid to distributors will be around 12 percent.

According to IANS, Corporate agents who are getting around 70 percent now are naturally unhappy. They want insurers to find new ways of ensuring that their earnings remain intact. life insurers are exploring options like launching riders with savings element on term-assurance products and also growing commission rates on traditional products such as donation and money-back policies to remain their till boxes tingling. The new norms will put tremendous pressure on corporate distributors. But they have to understand whole life insurance is a volumes business," R. Krishnamurthy, managing director for products, distribution and risk consulting with Towers Watson.
Insurance policy riders are extension of a basic policy to provide additional covers for more charges. In contrast, term assurance is a pure life insurance policy under which a policyholder gets his/her life covered without any return on the premium paid. Queried about the stipulation that rider charges should not be more than 30 percent of the premium for the basic policy, another official told IANS: "That cap is applicable only on risk wrap and not on the savings element.
He explained that it will not be astonishing if insurance companies launch a Ulip scheme, camouflaged as term assurance, in the markets from this September, so that it will be business as usual for them as well as their distributors. According to industry officials, some life insurers have already filed such products for approval with the insurance regulator, adding the onus was now on the IRDA to approve the revised products so that companies can sell them from beginning.