In a slew of changes Insurance Regulatory and Development Authority (IRDA) is set to relax Guaranteed Surrender Value (GSV) norms for traditional products. IRDA has suggested that all traditional policies should acquire surrender value before completing three years.
IRDA said that all regular pay products and limited pay products with the Premium Payment Term (PPT) of ten years or more should acquire a GSV on the receipt of third-year premium. However, for the policies having PPT of less than ten years policy should acquire GSV by the end of second year.
Earlier policyholder had to wait for the completion of the third year to get surrender value.
Surrender value is what a policyholder gets if he terminates or stops paying premiums before the end of tenure. In such case policyholder get 30-35% of total premium paid minus first year’s premium, along with this insurers offer special surrender value which is calculated after considering the current market value of assets held against the policy.
IRDA is also planning to relax surrender value norms on single premium policies. IRDA has recommended that all single premium policies should acquire surrender value at the end of first year. At present payout of the amount is made only after three years.
IRDA has also recommended that minimum PPT which is currently two years should be increased to five years.
IRDA has also suggested capping commissions on limited pay products.
Posted by Bijay on May 18th, 2012
IRDA said that all regular pay products and limited pay products with the Premium Payment Term (PPT) of ten years or more should acquire a GSV on the receipt of third-year premium. However, for the policies having PPT of less than ten years policy should acquire GSV by the end of second year.
Earlier policyholder had to wait for the completion of the third year to get surrender value.
Surrender value is what a policyholder gets if he terminates or stops paying premiums before the end of tenure. In such case policyholder get 30-35% of total premium paid minus first year’s premium, along with this insurers offer special surrender value which is calculated after considering the current market value of assets held against the policy.
IRDA is also planning to relax surrender value norms on single premium policies. IRDA has recommended that all single premium policies should acquire surrender value at the end of first year. At present payout of the amount is made only after three years.
IRDA has also recommended that minimum PPT which is currently two years should be increased to five years.
IRDA has also suggested capping commissions on limited pay products.
Posted by Bijay on May 18th, 2012
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