Friday, January 31, 2014

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.

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