Friday, January 31, 2014

Reliance Life launches 'Super Money Back', a traditional plan

Private sector insurer Reliance Life Insurance, an arm of Anil Ambani-led Reliance Group's financial services firm Reliance Capital Limited has recently announced the launch of its new traditional non-participating product-Super Money Back.

This plan provides guaranteed money back benefits to policyholders after a block of every five years throughout the policy period in addition to an increasing monthly income that starts after the premium payment term.

Reliance Super Money Back policy also provides life insurance cover for the entire policy term by paying premiums for just half of the opted policy tenure.

Customers in the age group of 18 to 55 years can buy this product. The minimum sum assured under the policy is Rs. 1,00,000; and the policy term can be opted from 10, 20, 30, 40 or 50 years.

IRDA brings out simplified, standard products for rural area

With a view to raise insurance penetration in rural area the Insurance Regulatory and Development Authority (IRDA) on Thursday rolled out simplified, standard products tailored to be sold by life insurance companies through about one lac Common Services Centers (CSCs). Two types of products  a term plan and a saving plan will be sold through this distribution network. These low ticket size cost effective products are especially designed to suit the target population.

As per the IRDA notification, the products sold through this distribution model shall be prefixed with the word 'CSC', so that these products can be easily distinguished. “Every insurer shall file the products under the current file and use procedure for distribution under this channel," the circular said.

CSC distribution model is not mandated by the regulator, it's totally on voluntary basis. Besides the commission to be paid to CSC to procure the new business, there would be service charges for post sale services of the policy. The maximum commission under these policies would be 5% of the premiums paid in the first year. And, from second year onwards, there shall be no commission. The service charges would be fixed for every activity undertaken by the CSC.

For term insurance plan, the maximum sum insured would be rupees two lac. And for saving plans, the maximum premium would be Rs. 20,000, and the policy period would be between 5 to 15 years.

Thursday, January 30, 2014

Insurers consider suicides as natural deaths

In order to smooth processing of claim settlements, life insurance companies in India consider suicides at par with natural deaths and not as accidental deaths.

As per senior officials from the industry, for a smooth claim settlement it has to be proved that the life insured has committed suicide. It is because there is a conception that most suicides are not pre-meditated.

Although, during the settlement of claims where the insured dies because of suicide, the insurers look at how old the policy is. Because in suicidal case, the insurers have a waiting period of one year; and only after the period they settle claims. It means if an insured commits suicide within one year of buying a life insurance policy, and it is proved that the insured had indeed committed suicide, the nominee in the insurance policy will not be able to get any amount from the insurer.

Further, the officials said that some life insurance products come with double accident claim benefits. In case of a suicide, the nominee in the policy cannot claim the extra sum assured for accidental deaths. In cases where the death is not due to natural causes and also it is not proven to be suicide, it is accepted as an unnatural death and extra claims for accidental deaths usually paid.

LIC agents want withdrawal of service tax levied on insurance premium

In protest against levy of service tax on insurance premium with effect from January 1, 2014, LIC agents from Tamil Nadu, Kerala and Puducherry gathered at Chennai on Friday. The rally led by Southern Zone President of Life Insurance Agents' Federation of India (LIAFI) Mr. V. Ganeshan sought immediate withdrawal of the introduction of service tax of 3.09 % on insurance premium.

“At a time, when we are asking the management to extend more benefits to the policyholders and introduce user-friendly policies, the introduction of service tax of 3.09 % on traditional products is unnecessary. It will pinch their pockets as it is an extra burden. This will force most of them to discontinue the policies. There are over 11.4 lac LIC agents in the country and equal number of agents in the private sector. LIC has 30 crore policyholders and they should not be exploited in the name of new taxes", said LIAFI president Mr. H.M. Jain at the Golden Jubilee celebrations of southern zonal council meet.

The service tax would affect LIC's business as more than 20 crore policy holders are from lower and middle income groups, said Mr. Ganeshan adding, “In the coming days, it might delay settlement of death claims or maturity claims and even affect LIC reserves too."

Monday, January 27, 2014

IRDA asks insurer to adopt effective measures to curb laundering

With a view to curb money-laundering through insurance, the Insurance Regulatory and Development Authority has asked private player Birla Sun Life Insurance Company to adopt affective procedure to know source of funds by policyholders and not merely rely on documentation for premium payment of over rupees one lac per annum.

“Authority advises Birla Sun Life Insurance Company to lay adequate emphasis on effective procedures for strengthening the compliance norms of the AML (Anti-Money Laundering) master circular and all subsequent regulatory instructions issued on this matter from time to time,“ the regulator said in a recent order.

It is believed that the new IRDA order is an implication of a news last year that had accused 23 leading banks and insurance firms including Birla Sun Life Insurance Company of 'running a nationwide money-laundering racket, blatantly violating laws of the land'.

According to the news published on a web-portal, the financial entities offered to open bank accounts and lockers without following Know Your Customer (KYC) norms, convert black money into white and obtain fictitious PAN cards.

The regulator, in a separate order, guided Future Generali India Life Insurance to put in place fair compliance system while submitting information to the Authority.

Further, the order said that the company during the hearing discovered the fact that there was a procedural lapse while exercising the due diligence when forwarding the referral application to the Authority.