To make sure that policyholders are adequately covered, Insurance Regulatory and Development Authority (IRDA) has asked life insurance companies that all life insurance products should have minimum sum assured in the case of death. Life cover should be either ten time’s of annualized premium or 105% of the total premium paid till the date of death.
At present death and maturity benefits are calculated on the basis of sum assured and bonus. Also currently there is no specified sum assured limit.With this move death benefits will be directly linked to premium payment unlike the case now.
As per IRDA product designs should be such that they meet the policyholder’s needs first and allow cash flows to satisfy the business requirement of the insurer and other service providers.For non-participating policies, the sum assured will be based on the Premium Paying Term (PPT) and the premium paid annually.
Life insurance products are classified as participating (par) or non-participating (non-par). In under-par or (with-profit) policies, policyholders are entitled to receive from the surplus of the insurer. This is generated by pooling and investing premium collected. Whatever surplus is generated, the insured receives his portion through a bonus. All traditional policies except pure term policies come under this category.
On the other hand, non-par products are those where returns are guaranteed and benefits are disclosed upfront. In these products insurer does not distribute its surplus. Under this category pure term plans and Unit-Linked Insurance Plan (ULIPs) falls.
At present death and maturity benefits are calculated on the basis of sum assured and bonus. Also currently there is no specified sum assured limit.With this move death benefits will be directly linked to premium payment unlike the case now.
As per IRDA product designs should be such that they meet the policyholder’s needs first and allow cash flows to satisfy the business requirement of the insurer and other service providers.For non-participating policies, the sum assured will be based on the Premium Paying Term (PPT) and the premium paid annually.
Life insurance products are classified as participating (par) or non-participating (non-par). In under-par or (with-profit) policies, policyholders are entitled to receive from the surplus of the insurer. This is generated by pooling and investing premium collected. Whatever surplus is generated, the insured receives his portion through a bonus. All traditional policies except pure term policies come under this category.
On the other hand, non-par products are those where returns are guaranteed and benefits are disclosed upfront. In these products insurer does not distribute its surplus. Under this category pure term plans and Unit-Linked Insurance Plan (ULIPs) falls.
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