In a bid to prevent money laundering, Insurance regulatory and Development Authority (Irda) has barred insurance companies from accepting premium in advance beyond 30 days. In a circular to chief executives of life insurance companies, Irda said this move would also ensure regular payment of premium by customers. “Collection of advance premium under both, linked and non-linked products, shall not be allowed except in the case mentioned,” the circular said. In case you have opted for monthly premium payment mode, now you will be allowed to pay only three months premium in advance on the date of commencement of the policy.
For example, if your policy commenced on March 1, you will be allowed to pay three months advance premium on March 1 only. At present, a policyholder can make a lumpsum payment of premium before the due date and even avail a nominal interest or some discount on it. “Few insurance companies had allowed their policyholders to pay the annual premium upfront at the time of buying the policy, on which, the insurer gives some discount.
The regulator wants to stop this practice as insurance is a long term financial planning tool, and promotes regular savings habit,” said Suresh Agarwal, executive vice-president and head of distribution and strategic initiatives at Kotak Mahindra Old Mutual Life Insurance. Insurers say that it is sometimes convenient for policyholders to pay in advance. “Insurance companies allowed those policyholders who were leaving country for few years or were not willing to pay regular premium, to pay the lump-sum premium and avail discounts. The number of such policyholders is very low, and this practice was prevalent in traditional life insurance policies only,” said Gorakh Nath Agarwal, chief actuary at Future Generali India Life Insurance.
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For example, if your policy commenced on March 1, you will be allowed to pay three months advance premium on March 1 only. At present, a policyholder can make a lumpsum payment of premium before the due date and even avail a nominal interest or some discount on it. “Few insurance companies had allowed their policyholders to pay the annual premium upfront at the time of buying the policy, on which, the insurer gives some discount.
The regulator wants to stop this practice as insurance is a long term financial planning tool, and promotes regular savings habit,” said Suresh Agarwal, executive vice-president and head of distribution and strategic initiatives at Kotak Mahindra Old Mutual Life Insurance. Insurers say that it is sometimes convenient for policyholders to pay in advance. “Insurance companies allowed those policyholders who were leaving country for few years or were not willing to pay regular premium, to pay the lump-sum premium and avail discounts. The number of such policyholders is very low, and this practice was prevalent in traditional life insurance policies only,” said Gorakh Nath Agarwal, chief actuary at Future Generali India Life Insurance.
curtecy degitalfc
vinay mohanty
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