A variable life insurance plan (VLIP) combines investment and insurance, just like a unit-linked insurance plan (ULIP). Variable life insurance schemes offer flexibility in the ratio of mortality and savings components.
These plans also offer more clearness, simplicity, quick liquidity, guaranteed minimum returns, transparent charges and ample risk cover. This type of life insurance allows you to contribute in several investment options simultaneously targeting your premiums to separate accounts.
Generally, the optional investment funds include stocks, bonds, money market funds, equity funds, or a mixture of them all. Variable Life Insurance allows you to switch from one sub-account to another.
You can also apply the interest earned on these investments toward the premium, reducing the amount you pay. In a going away from the ULIPs, the returns are declared by insurance companies annually and are not linked to the stock market.
One part of the premium is allocated to buy life insurance. The balance is invested in bonds or equities. The premium amount cannot be changed in the course of the policy, but the death benefit and savings element can be reviewed and altered as the policyholder's circumstances change.
You can increase your insurance protection and decrease the investment component, or vice versa. Another feature of this plan is that it does not get automatically cancelled if the policyholder fails to pay the premiums as long as the premiums paid till date meet policy requirements. Under the plans, the premiums paid by the holder, after deduction of charges, will be credited to the account maintained separately for each policyholder.
If all due premiums are paid, the amount held in the policyholder's account will earn an annual interest which will be guaranteed for the entire policy term. In addition to this guaranteed return, if all due premiums are paid; the individual policyholder's account may earn an additional return depending upon the experience under the plan.
There is an option to pay additional (top-up) premiums without any increase in risk cover to the extent of total basic premiums paid under the policy. The premiums can be paid regularly at yearly, half-yearly, quarterly or monthly (through ECS mode only) intervals over the term of the policy. The sum assured ranges from 10 to 30 times the annualized premium, depending on age of entry.
There are two types of variable life insurance plans - participating and non-participating. Participating plans offer a guaranteed return, while nonparticipating plans offer an annual bonus at the end of each financial year in addition to guaranteed returns.
The minimum sum assured is Rs 50,000 or 10 times the annualized premium, whichever is higher for entry at the age below 45 years. After that age, the maximum is Rs 50,000 or 7 times the annualized premium.
Top-up premium is allowed throughout the term. In case the insured decides to increase his contribution through a onetime top-up, a maximum of up to 3 percent charges may be deducted from the top-up. The product also provides for loans up to 60(%) percent of the balance at a specific rate of interest.
Sunday, February 27, 2011
Wednesday, February 23, 2011
New Money Back Plan – Cash Rich Launched by Bajaj Allianz
Bajaj Allianz Life Insurance has launched a traditional money-back plan – Bajaj Allianz Cash Rich, which gives guaranteed cash back of 5(%) per cent of the sum assured after the achievement of the premium payment term.
It is a limited premium payment, participating plan that provides cash benefits at 3 stages of the policy life cycle. This can be a good option for your personal finance planning.
“By paying a small amount for a few years, you can get returns year on year. The cash back at various stages of the policy term makes the plan idea for all customer age groups – youngsters, salaried people, married couples or senior citizens nearing retirement – and help them meet various financial objectives with the extra annual income. The low annual premium of Rs. 8000 makes it reasonable to a larger section of the population,” said Akshay Mehrotra, head of marketing at Bajaj Allianz Life Insurance.
The cash benefits are given at the stage of completion of premium payment term (an accumulated compound reversionary bonus is payable) and then cash back benefit of 5(%) per cent of the sum assured plus cash bonus (if any declared) is payable every year throughout the cash back period after the premium payment term is completed up to the maturity date. And then, on the maturity of the policy, the sum assured is paid along with the terminal bonus.
The plan offers the flexibility to select the policy term from 10 years to 65 years depending on your financial need. One can also select a limited premium payment term (PPT) from 5 years to 30 years, in multiple of 5 years. The plan offers a discount for premiums paid in advance, which is declared by the company every year. The rate of discount for FY 10-11 is 7(%) per cent per annum compounding annually.
Among other features, the policy will stay in force for the full sum assured for two years, even if the subscriber misses payment of premiums on due dates, provided s/he has paid at least three year’s premium in full.
One can also transfer the policy to a single premium term cover with return of premium policy; if you miss the payment of premium on due dates provided s/he has paid at least five years’ premiums in full. The subscriber also has the option of enhancing protection by using various riders available with the product.
It is a limited premium payment, participating plan that provides cash benefits at 3 stages of the policy life cycle. This can be a good option for your personal finance planning.
“By paying a small amount for a few years, you can get returns year on year. The cash back at various stages of the policy term makes the plan idea for all customer age groups – youngsters, salaried people, married couples or senior citizens nearing retirement – and help them meet various financial objectives with the extra annual income. The low annual premium of Rs. 8000 makes it reasonable to a larger section of the population,” said Akshay Mehrotra, head of marketing at Bajaj Allianz Life Insurance.
The cash benefits are given at the stage of completion of premium payment term (an accumulated compound reversionary bonus is payable) and then cash back benefit of 5(%) per cent of the sum assured plus cash bonus (if any declared) is payable every year throughout the cash back period after the premium payment term is completed up to the maturity date. And then, on the maturity of the policy, the sum assured is paid along with the terminal bonus.
The plan offers the flexibility to select the policy term from 10 years to 65 years depending on your financial need. One can also select a limited premium payment term (PPT) from 5 years to 30 years, in multiple of 5 years. The plan offers a discount for premiums paid in advance, which is declared by the company every year. The rate of discount for FY 10-11 is 7(%) per cent per annum compounding annually.
Among other features, the policy will stay in force for the full sum assured for two years, even if the subscriber misses payment of premiums on due dates, provided s/he has paid at least three year’s premium in full.
One can also transfer the policy to a single premium term cover with return of premium policy; if you miss the payment of premium on due dates provided s/he has paid at least five years’ premiums in full. The subscriber also has the option of enhancing protection by using various riders available with the product.
Tuesday, February 22, 2011
Irda wants life insurers to face 10% stake sale restriction
Life insurance companies will not be allowed to dilute more than 10 per cent stake through initial public offers (IPOs).
The Insurance Regulatory & Development Authority (Irda) is set to cap the stake dilution by life insurers in the first three years of listing. The market regulator, the Securities & Exchange Board of India (Sebi), mandates that 25 per cent shares of a listed company should be detained by the public. Irda is in talks with Sebi to waive this rule.
Private life insurers such as Reliance Life, ICICI Prudential, HDFC Life and SBI Life have expressed interest in tapping the capital markets. The massive valuations of life insurance companies are said to be the main reason for the move, according to a source with direct knowledge of the matter.
“At present, the market value of all life insurance companies if they dilute 25 per cent stake is estimated around Rs 60,000 crore. It will be very hard for the market to absorb such a huge amount. So, there must be a cap on the extent of stake dilution,” said the source.
However, details regarding the extent of the dilution by joint project partners could be left to the companies. “There are a lot of issues involved with shareholding agreements in joint ventures. Ideally, regulators would like to stay away from them. It is still being debated, but will vary on a case-to-case basis,” an Irda official told Business Standard on condition of anonymity. He added the regulator would, however, prefer domestic companies to hold the majority stake.
At present, most of the 22 private life insurers have foreign partners. The Insurance Act caps foreign direct investment at 26 per cent.
Irda is likely to release the IPO guidelines within the next 30-45 days.
According to Irda data, during the first nine months of the financial year, the new business premium income of life insurance companies stood at Rs 86,699 crore. The private life insurers accounted for around 29 per cent of this.
Irda may also allow companies operational for seven years to tap the capital market. The present norms mandate at least 10 years of operations.
Irda may also allow companies which have not registered profit for the past three consecutive years to float a public issue. “According to the disclosure norms, it will be mandatory for insurance companies to declare the profitability of individual products in balance sheets. This apart, they have to disclose their balance sheets, premiums, commission expenses, operating expenses, on annual, half-yearly and quarterly basis. This will help investors take informed decisions,” said the Irda official.
The Insurance Regulatory & Development Authority (Irda) is set to cap the stake dilution by life insurers in the first three years of listing. The market regulator, the Securities & Exchange Board of India (Sebi), mandates that 25 per cent shares of a listed company should be detained by the public. Irda is in talks with Sebi to waive this rule.
Private life insurers such as Reliance Life, ICICI Prudential, HDFC Life and SBI Life have expressed interest in tapping the capital markets. The massive valuations of life insurance companies are said to be the main reason for the move, according to a source with direct knowledge of the matter.
“At present, the market value of all life insurance companies if they dilute 25 per cent stake is estimated around Rs 60,000 crore. It will be very hard for the market to absorb such a huge amount. So, there must be a cap on the extent of stake dilution,” said the source.
However, details regarding the extent of the dilution by joint project partners could be left to the companies. “There are a lot of issues involved with shareholding agreements in joint ventures. Ideally, regulators would like to stay away from them. It is still being debated, but will vary on a case-to-case basis,” an Irda official told Business Standard on condition of anonymity. He added the regulator would, however, prefer domestic companies to hold the majority stake.
At present, most of the 22 private life insurers have foreign partners. The Insurance Act caps foreign direct investment at 26 per cent.
Irda is likely to release the IPO guidelines within the next 30-45 days.
According to Irda data, during the first nine months of the financial year, the new business premium income of life insurance companies stood at Rs 86,699 crore. The private life insurers accounted for around 29 per cent of this.
Irda may also allow companies operational for seven years to tap the capital market. The present norms mandate at least 10 years of operations.
Irda may also allow companies which have not registered profit for the past three consecutive years to float a public issue. “According to the disclosure norms, it will be mandatory for insurance companies to declare the profitability of individual products in balance sheets. This apart, they have to disclose their balance sheets, premiums, commission expenses, operating expenses, on annual, half-yearly and quarterly basis. This will help investors take informed decisions,” said the Irda official.
Saturday, February 19, 2011
Royal Sundaram, Reliance division to re-apply for merger
Move necessitated by Irda’s draft rule for non-life M&As.
In light of the proposed merger and acquisition (M&A) guidelines for non-life insurance firms, general insurers Royal Sundaram and Reliance General, which had applied for a merger in July 2010 and were awaiting the regulator’s permission, will have to file their application afresh.
Last week, the Insurance Regulatory and Development Authority (Irda) laid down the draft guidelines for M&As among non-life insurance companies. It has invited comments by February 22, after which it will come up with the final guidelines. When the two companies applied, there were no guidelines for general insurers. As a result, they had to follow the norms applicable to life insurance companies.
“There were no merger-exact norms in the non-life space when the two companies applied. Since they have not got an approval from the regulator, they will have to re-file the application,” said a senior Irda official.
Apart from issues of taxation and valuation and the projected revenue of the merged entity, the draft guidelines put up by the regulator look into reinsurance strategies, protection and maintenance of reinsurance assets and key contracts and policyholders’ interests.
Both companies submitted the proposal for merger in July last year.
Royal Sundaram Alliance Managing Director Ajay Bimbhet said the company’s policy did not allow him to comment on the matter. Reliance General could not be reached for comment.
Reliance General has been scaling down business for some time. Even as the industry posted 24(%) per cent growth, Reliance General registered a loss of 22(%) per cent in gross written premium income during the nine months ended December.
According to the proposal, the UK-based RSA group was expected to have a 26(%) per cent stake in Reliance General, the fourth-largest private general insurer. As of now, Reliance Capital owns 100(%) per cent stake in the company. South-based Sundaram group, which holds 74(%) per cent in Royal Sundaram General Insurance, was likely to exit through this merger.
As of now, the deal has hit a roadblock. Sources close to the development say the companies have not reached an agreement regarding the valuation.
In light of the proposed merger and acquisition (M&A) guidelines for non-life insurance firms, general insurers Royal Sundaram and Reliance General, which had applied for a merger in July 2010 and were awaiting the regulator’s permission, will have to file their application afresh.
Last week, the Insurance Regulatory and Development Authority (Irda) laid down the draft guidelines for M&As among non-life insurance companies. It has invited comments by February 22, after which it will come up with the final guidelines. When the two companies applied, there were no guidelines for general insurers. As a result, they had to follow the norms applicable to life insurance companies.
“There were no merger-exact norms in the non-life space when the two companies applied. Since they have not got an approval from the regulator, they will have to re-file the application,” said a senior Irda official.
Apart from issues of taxation and valuation and the projected revenue of the merged entity, the draft guidelines put up by the regulator look into reinsurance strategies, protection and maintenance of reinsurance assets and key contracts and policyholders’ interests.
Both companies submitted the proposal for merger in July last year.
Royal Sundaram Alliance Managing Director Ajay Bimbhet said the company’s policy did not allow him to comment on the matter. Reliance General could not be reached for comment.
Reliance General has been scaling down business for some time. Even as the industry posted 24(%) per cent growth, Reliance General registered a loss of 22(%) per cent in gross written premium income during the nine months ended December.
According to the proposal, the UK-based RSA group was expected to have a 26(%) per cent stake in Reliance General, the fourth-largest private general insurer. As of now, Reliance Capital owns 100(%) per cent stake in the company. South-based Sundaram group, which holds 74(%) per cent in Royal Sundaram General Insurance, was likely to exit through this merger.
As of now, the deal has hit a roadblock. Sources close to the development say the companies have not reached an agreement regarding the valuation.
Thursday, February 17, 2011
Difference between Term Life Insurance and Permanent Life Insurance
Permanent life insurance as the name suggests is a form of life insurance which will last for the entire life of the person insured. Typically term life insurance is purchased for a fixed term, be it for a year or five, or even as long as 30 years.
In term life insurance, the consumer pays a premium and the payout is paid in the event that the insured passes away during that term. Whereas, a permanent life insurance policy lasts for the insured person’s entire life, so a payout is guaranteed.
Your permanent life insurance premiums are invested, so the policy accrues cash value. Term policies on the other hand, accrue no value and pay nothing unless the insured person passes away during the policy’s fixed term.
Premiums for the two forms of policy are different. A permanent policy charges higher premium than for a term policy.
But a point to note; the premiums for that term policy rises with the age of the insured person. But it is reverse for a permanent life insurance; in fact the initial premium gets invested and grows.
That growth is tax-deferred if the policy is cashed in during the insured person’s lifetime. Proceeds are usually tax-free to the beneficiary upon the insured person’s death.
So, which insurance is right for you?
Well it all depends on your needs. Like how long you plan to keep it for? If you only need a certain amount of coverage for a short amount of time, then chances are that a term policy will best suit your needs. If, on the other hand, there are expenses you will leave behind, then a permanent policy could be the right choice.
In term life insurance, the consumer pays a premium and the payout is paid in the event that the insured passes away during that term. Whereas, a permanent life insurance policy lasts for the insured person’s entire life, so a payout is guaranteed.
Your permanent life insurance premiums are invested, so the policy accrues cash value. Term policies on the other hand, accrue no value and pay nothing unless the insured person passes away during the policy’s fixed term.
Premiums for the two forms of policy are different. A permanent policy charges higher premium than for a term policy.
But a point to note; the premiums for that term policy rises with the age of the insured person. But it is reverse for a permanent life insurance; in fact the initial premium gets invested and grows.
That growth is tax-deferred if the policy is cashed in during the insured person’s lifetime. Proceeds are usually tax-free to the beneficiary upon the insured person’s death.
So, which insurance is right for you?
Well it all depends on your needs. Like how long you plan to keep it for? If you only need a certain amount of coverage for a short amount of time, then chances are that a term policy will best suit your needs. If, on the other hand, there are expenses you will leave behind, then a permanent policy could be the right choice.
ING Life eyes 50% increase in biz from north
ING Life Insurance Company, the insurance arm of the ING Group, is eyeing 50(%) per cent increase in business from the northern region. The region for ING life comprises Jammu and Kashmir, Punjab, Haryana, Himachal Pradesh, Delhi and Rajasthan.
ING Life Insurance (North) Executive Vice-President Ajay Kapoor maintained, as against business of Rs 24 crore in the related period last year they were anticipating surge in business. In addition to new products which comprise both traditional products as well as unit-linked insurance plan (Ulip), the growth would be fuelled by the spike in sales of insurance products for the 3 months from January to March.
Many people still consider insurance as a tax-saving tool which results in business rolling for the insurance sector especially during 3 months from January to March.
Ajay Kapoor was here to launch the traditional insurance product ING ACE. The new plan comes in two variants – ING ACE Pension and ING ACE Life. While the pension variant offers customers guaranteed addition of 8.75(%) per cent p a throughout the 10-year term of the policy. ING ACE Life version offers 7.75(%) per cent or 7(%) per cent p a guaranteed additions, depending on the premium paid. In both the plans customers need to pay premium for only 3 years in an annual mode, and tax benefits.
Kapoor maintained ING Life insurance which ranked 13th among the insurance companies had ascended to the 11th position now, and was expecting to touch the 10th position by March-end this year.
ING Life Insurance (North) Executive Vice-President Ajay Kapoor maintained, as against business of Rs 24 crore in the related period last year they were anticipating surge in business. In addition to new products which comprise both traditional products as well as unit-linked insurance plan (Ulip), the growth would be fuelled by the spike in sales of insurance products for the 3 months from January to March.
Many people still consider insurance as a tax-saving tool which results in business rolling for the insurance sector especially during 3 months from January to March.
Ajay Kapoor was here to launch the traditional insurance product ING ACE. The new plan comes in two variants – ING ACE Pension and ING ACE Life. While the pension variant offers customers guaranteed addition of 8.75(%) per cent p a throughout the 10-year term of the policy. ING ACE Life version offers 7.75(%) per cent or 7(%) per cent p a guaranteed additions, depending on the premium paid. In both the plans customers need to pay premium for only 3 years in an annual mode, and tax benefits.
Kapoor maintained ING Life insurance which ranked 13th among the insurance companies had ascended to the 11th position now, and was expecting to touch the 10th position by March-end this year.
Wednesday, February 16, 2011
Plan a wonderful cover for your wedding day
Its plain unpromising. The mere thought is irreverent. Most people do not expect anything even remotely unpleasant to occur on the big day of their lives. After all, nothing can possibly go wrong when it comes to your very own band, baaja and baarat!
But we all know that disaster strikes without warning and that is the reason why you need to be sure that in case of any unexpected situation, at least the investments made in weddings are secure. According to estimates, the size of the wedding industry is approximately between Rs 1, 90,000 crore and Rs 2, 25,000 crore. Says Anita Singh, a wedding planner, “Nowadays, weddings can cost anywhere between `10 lakh to right up to even a crore.” And, if you are spending a major part of your life savings on this one event, you would definitely welcome security. And, wedding insurance is one such product that can help you insulate the losses, if the need arises.
WHAT DOES IT OFFER?
Most of the companies sell wedding insurance as a part of event insurance. The policy broadly covers personal accident, postponement or cancellation of the wedding and the damage of the property at the wedding venue. However, these policies can be customised according to your needs. So, if you are little wary of the kind of food that you have been eating before the wedding and you see it as a risk, then you can add food poison in the cover.
Also, if any of the close relatives of the bride or the bridegroom are unwell and there is a possibility that the event could get cancelled or postponed because of their accidental death, then you can buy a cover for that as well. You can also ask for a cover against burglary of jewellery, or the event getting cancelled as either the bride or the bridegroom is unable to reach the venue on time. If the wedding gets postponed/cancelled due to damage to marriage halls, then fret not, as that can also be insured. Even a terror attack is another risk that is now covered.
WHAT’S NOT COVERED
Any wedding that is cancelled due to a dispute between the marriage parties will not be covered. However, some policies do cover cancellations if the groom does not turn up due to unpaid dowry. Also, if you have any last-minute doubts and get cold feet on your big day, then don’t expect the insurer to pick up the bill. Insurance companies also do not cover willful negligence and criminal misconduct. Most importantly, you need to read the fine print very carefully as the terms and conditions vary depending on the insurance provider.
THE MONEY TANGLE
Bajaj Allianz offers four fixed options for the sum insured — Rs 20 lakh, Rs 35 lakh, Rs 58 lakh and Rs 73 lakh. The premiums for these are Rs 2,252, Rs 4,004, Rs 6,232 and Rs 8,273 (including service tax), respectively. However, the other companies generally provide a customised cover, so “premium rates broadly vary from 0.75% -1.5% of the total sum insured, depending upon various risk parameters like safety and security arrangements at the venue, geographical area, risk management or contingency plan etc.
But we all know that disaster strikes without warning and that is the reason why you need to be sure that in case of any unexpected situation, at least the investments made in weddings are secure. According to estimates, the size of the wedding industry is approximately between Rs 1, 90,000 crore and Rs 2, 25,000 crore. Says Anita Singh, a wedding planner, “Nowadays, weddings can cost anywhere between `10 lakh to right up to even a crore.” And, if you are spending a major part of your life savings on this one event, you would definitely welcome security. And, wedding insurance is one such product that can help you insulate the losses, if the need arises.
WHAT DOES IT OFFER?
Most of the companies sell wedding insurance as a part of event insurance. The policy broadly covers personal accident, postponement or cancellation of the wedding and the damage of the property at the wedding venue. However, these policies can be customised according to your needs. So, if you are little wary of the kind of food that you have been eating before the wedding and you see it as a risk, then you can add food poison in the cover.
Also, if any of the close relatives of the bride or the bridegroom are unwell and there is a possibility that the event could get cancelled or postponed because of their accidental death, then you can buy a cover for that as well. You can also ask for a cover against burglary of jewellery, or the event getting cancelled as either the bride or the bridegroom is unable to reach the venue on time. If the wedding gets postponed/cancelled due to damage to marriage halls, then fret not, as that can also be insured. Even a terror attack is another risk that is now covered.
WHAT’S NOT COVERED
Any wedding that is cancelled due to a dispute between the marriage parties will not be covered. However, some policies do cover cancellations if the groom does not turn up due to unpaid dowry. Also, if you have any last-minute doubts and get cold feet on your big day, then don’t expect the insurer to pick up the bill. Insurance companies also do not cover willful negligence and criminal misconduct. Most importantly, you need to read the fine print very carefully as the terms and conditions vary depending on the insurance provider.
THE MONEY TANGLE
Bajaj Allianz offers four fixed options for the sum insured — Rs 20 lakh, Rs 35 lakh, Rs 58 lakh and Rs 73 lakh. The premiums for these are Rs 2,252, Rs 4,004, Rs 6,232 and Rs 8,273 (including service tax), respectively. However, the other companies generally provide a customised cover, so “premium rates broadly vary from 0.75% -1.5% of the total sum insured, depending upon various risk parameters like safety and security arrangements at the venue, geographical area, risk management or contingency plan etc.
Friday, February 4, 2011
Third-party agents | Irda tightens norms
Move to contain industry growth, say insurers.
The Insurance Regulatory and Development Authority (Irda) on Wednesday announced firm guidelines on agents servicing third-party policies. It has linked the norms to their past presentation and the number of years of experience.
The regulator on Wednesday said the total amount collected by agents for a given financial year should not exceed 3 times the renewal commission earned in the previous financial year. Also, agents for third-party services should have been in survival for at least two years.
A senior Irda official said there had been complaints of agents procuring business on behalf of other agents. He referred to an incident where an agent in Kerala had disappeared with the money of policyholders.
Irda said, “The insurer should assign this action to agents and corporate agents by allocating only a specified list of the policies, where the services of the agents that procured the business are no longer available to the insurer,”
Insurers outsource cheque pick-up work and premium collection to individual agents and corporate agents. Irda has defined such collection and pick-up by agents who have not procured such business as outsourcing. It asked insurers to look at the credentials of individual agents and corporate agents while outsourcing these.
Insurance companies’ executives said the move would restrict the industry.
P Nandagopal, chief executive officer of India First Life Insurance, says Irda should not get into micro management. “Risk management systems should be put in place and the regulator should not look into micro management. This is restrictive.”
Another executive of a large insurance company said the move was absolutely restrictive and would only bring down the premium collection.
Life Insurance Corporation of India (LIC) would be the most affected.
“This decision has been taken after consulting all parties,” an Irda official added. He said an insurer should remain accountable to the receipts issued by authorized agents or intermediaries. “Where an insurer permits its agent to collect premiums on its behalf, it shall be noted that in such instances, the agent is acting on behalf of the insurer,” said Irda.
It has put up a list of core and non-core activities. Those such as underwriting, product design and all actuarial functions, bank reconciliation and market conduct issues are core. Call centre and outbound calling for registering complaints or answering enquiries, claim processing for overseas medical insurance contracts and tele-marketing is non-core.
Insurers are asked to terminate all existing outsourcing contracts entered into in breaking of these guidelines before June 31, 2011. Irda said it might relax the limit by three more months, on a case to case basis, in respect of the existing contracts.
The Insurance Regulatory and Development Authority (Irda) on Wednesday announced firm guidelines on agents servicing third-party policies. It has linked the norms to their past presentation and the number of years of experience.
The regulator on Wednesday said the total amount collected by agents for a given financial year should not exceed 3 times the renewal commission earned in the previous financial year. Also, agents for third-party services should have been in survival for at least two years.
A senior Irda official said there had been complaints of agents procuring business on behalf of other agents. He referred to an incident where an agent in Kerala had disappeared with the money of policyholders.
Irda said, “The insurer should assign this action to agents and corporate agents by allocating only a specified list of the policies, where the services of the agents that procured the business are no longer available to the insurer,”
Insurers outsource cheque pick-up work and premium collection to individual agents and corporate agents. Irda has defined such collection and pick-up by agents who have not procured such business as outsourcing. It asked insurers to look at the credentials of individual agents and corporate agents while outsourcing these.
Insurance companies’ executives said the move would restrict the industry.
P Nandagopal, chief executive officer of India First Life Insurance, says Irda should not get into micro management. “Risk management systems should be put in place and the regulator should not look into micro management. This is restrictive.”
Another executive of a large insurance company said the move was absolutely restrictive and would only bring down the premium collection.
Life Insurance Corporation of India (LIC) would be the most affected.
“This decision has been taken after consulting all parties,” an Irda official added. He said an insurer should remain accountable to the receipts issued by authorized agents or intermediaries. “Where an insurer permits its agent to collect premiums on its behalf, it shall be noted that in such instances, the agent is acting on behalf of the insurer,” said Irda.
It has put up a list of core and non-core activities. Those such as underwriting, product design and all actuarial functions, bank reconciliation and market conduct issues are core. Call centre and outbound calling for registering complaints or answering enquiries, claim processing for overseas medical insurance contracts and tele-marketing is non-core.
Insurers are asked to terminate all existing outsourcing contracts entered into in breaking of these guidelines before June 31, 2011. Irda said it might relax the limit by three more months, on a case to case basis, in respect of the existing contracts.
Wednesday, February 2, 2011
New Plan by Max New York Life Insurance
In line with the recent wave of insurance plan launches, Max New York Life has introduced a new Ulip (unit-linked insurance plan) – Flexi Fortune – in the market.
Premium Paying Term:
The limited pay plan offers three choices in terms of premium paying tenure – one can opt for either a 5-pay-10-year term, 10-pay-15-year-term or 15-pay-20-year term. In easy words, what this means is that you can choose to pay premiums for 5 years while the policy continues till 10 years (in the first option).
Protection Cover:
The sum assured (or the protection cover) will, depending on your option and age, range from 10 to 30 times your annual premium. There is also a provision to increase the sum assured by 10(%) per cent every year, but additional mortality charges as applicable will be levied.
Systematic Transfer Plan:
Under this option, which is available only to those who choose the annual payment mode, your annual premium will, after deduction of premium allocation charges, be initially directed to the Secure plus Fund. Subsequently, on each monthly anniversary, 1/12th of the initial units purchased (in the Secure Fund) will be switched to the Growth Super Fund. However, this shifting will not be considered as a switch.
Charges:
The premium allocation charge works out to 5(%) per cent in the 1st year and 4(%) per cent in the subsequent years. Policy administration charges in the first amount to Rs 960 for a 10-year policy and Rs 600 for policies with tenures of 15 and 20 years. Second year onwards, this charge will go up by 5(%) per cent per annum, compounded.
Other Features:
The policy also offers two riders, namely personal accident and dreaded disease benefits. Minimum age of entry for the policyholder under this Ulip is 7 years, while the maximum is 50 years. Under the 5-pay-10-yearterm option, the minimum premium payable is Rs 50,000. In case of the 10-pay and 15-pay variants, the minimum premium under the annual mode is Rs 24,000. The policy places an upper limit of Rs 1 lakh for all premium payment modes.
Upside:
The feature where the sum assured goes up every year and systematic transfer plan that ensures restricted investing while reducing the risks by spreading the investment over a period of year.
Downside:
High policy administration charges - Rs 600-960 in the first year, depending on the premium paying term. More importantly, this fee will increase at the rate of 5(%) per cent every year.
Premium Paying Term:
The limited pay plan offers three choices in terms of premium paying tenure – one can opt for either a 5-pay-10-year term, 10-pay-15-year-term or 15-pay-20-year term. In easy words, what this means is that you can choose to pay premiums for 5 years while the policy continues till 10 years (in the first option).
Protection Cover:
The sum assured (or the protection cover) will, depending on your option and age, range from 10 to 30 times your annual premium. There is also a provision to increase the sum assured by 10(%) per cent every year, but additional mortality charges as applicable will be levied.
Systematic Transfer Plan:
Under this option, which is available only to those who choose the annual payment mode, your annual premium will, after deduction of premium allocation charges, be initially directed to the Secure plus Fund. Subsequently, on each monthly anniversary, 1/12th of the initial units purchased (in the Secure Fund) will be switched to the Growth Super Fund. However, this shifting will not be considered as a switch.
Charges:
The premium allocation charge works out to 5(%) per cent in the 1st year and 4(%) per cent in the subsequent years. Policy administration charges in the first amount to Rs 960 for a 10-year policy and Rs 600 for policies with tenures of 15 and 20 years. Second year onwards, this charge will go up by 5(%) per cent per annum, compounded.
Other Features:
The policy also offers two riders, namely personal accident and dreaded disease benefits. Minimum age of entry for the policyholder under this Ulip is 7 years, while the maximum is 50 years. Under the 5-pay-10-yearterm option, the minimum premium payable is Rs 50,000. In case of the 10-pay and 15-pay variants, the minimum premium under the annual mode is Rs 24,000. The policy places an upper limit of Rs 1 lakh for all premium payment modes.
Upside:
The feature where the sum assured goes up every year and systematic transfer plan that ensures restricted investing while reducing the risks by spreading the investment over a period of year.
Downside:
High policy administration charges - Rs 600-960 in the first year, depending on the premium paying term. More importantly, this fee will increase at the rate of 5(%) per cent every year.
Tuesday, February 1, 2011
Protect your Vijaya bank running loan with Bajaj Allianz Insurance cover
Vijaya Bank has signed an MOU with Bajaj Allianz Life Insurance to cover its borrowers under a group life insurance plan.
As part of its ongoing strategy to provide to the diverse needs of its increasing clientele, the bank has been launching products and services tailor-made for different segments.
Through the present understanding with Bajaj Allianz Life Insurance, the bank is offering a product which enables the borrower, in an economical way, to protect his/her family from the load of repayment of the loan in the event of death.
Through this partnership, Bajaj Allianz aims to cover up to 4 lakh borrowers of Vijaya Bank across the country. The product will cover housing loans, education loans, vehicle loans, personal loans as well as other loans.
"This is a key that will provide financial protection from the load of loan repayment in the ill-timed event of borrower's death. Over 4 lakh borrowers in 1,185 networked branches of the bank spread across 28 states and 4 Union territories can avail the facility," Vijaya Bank chairman and managing director Albert Tauro said.
"This insurance plan will cover all customers of Vijaya Bank who have taken a loan for various purposes, irrespective of the amount of loan sanctioned. This coverage under a single product makes it easier for the bank and their customers to administer. Our partnership is another step in our association with such a big public sector bank, like Vijaya Bank," Bajaj Allianz Life Insurance chief distribution officer AS Narayanan said.
As part of its ongoing strategy to provide to the diverse needs of its increasing clientele, the bank has been launching products and services tailor-made for different segments.
Through the present understanding with Bajaj Allianz Life Insurance, the bank is offering a product which enables the borrower, in an economical way, to protect his/her family from the load of repayment of the loan in the event of death.
Through this partnership, Bajaj Allianz aims to cover up to 4 lakh borrowers of Vijaya Bank across the country. The product will cover housing loans, education loans, vehicle loans, personal loans as well as other loans.
"This is a key that will provide financial protection from the load of loan repayment in the ill-timed event of borrower's death. Over 4 lakh borrowers in 1,185 networked branches of the bank spread across 28 states and 4 Union territories can avail the facility," Vijaya Bank chairman and managing director Albert Tauro said.
"This insurance plan will cover all customers of Vijaya Bank who have taken a loan for various purposes, irrespective of the amount of loan sanctioned. This coverage under a single product makes it easier for the bank and their customers to administer. Our partnership is another step in our association with such a big public sector bank, like Vijaya Bank," Bajaj Allianz Life Insurance chief distribution officer AS Narayanan said.
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