life insurers line up 500 schemes for launch in jan2014

As many as 500 new insurance schemes are all set to hit the market in the next couple of months, following the approval of the Insurance Regulatory and Development Authority (IRDA) as part of its new guidelines applicable from first January 2014.
The IRDA has cleared over 500 products in line with the new design norms which are being introduced by the domestic life insurers. Most insurers have already redesigned their products and also obtained approvals.
The IRDA has issued new guidelines to make policies more customer-friendly. The new guidelines have introduced three broad categories of products –traditional insurance plans, variable insurance plans (VIPs) and Unit-linked insurance plans (ULIPs).
Insurance behemoth, Life Insurance Corporation of India (LIC) has already decided to stop selling as many as 48 insurance plans, including Jeevan Anand, Jeevan Madhur and Jeevan Saral, to comply with new regulatory guidelines, and planned to unveil a slew of new insurance schemes.
Private sector insurer Reliance Life Insurance has lined up over two dozen new insurance schemes, which include protection and retirement, for their launch, in the next three months. Reliance Life said that traditional plans will contribute 80% while the ULIPs will contribute around 20% to the top-line in the new product environment.
Aviva Life Insurance has already launched 13 products that are compliant with the new traditional product guidelines.
Another player, Max Life Insurance has plans to launch four new products by the first week of January in line with the revised IRDA guidelines. The company has already launched 13 products.
Bajaj Allianz Life Insurance has received approvals for its individual and group insurance plans under the new product guidelines and planned to launch three new insurance schemes. These plans will cover the needs of individuals at their different life stages. The company will also be launching a suite of online and channel specific insurance plans by next month.
HDFC Life will make available 21 products to consumers from first January 2014 which will be compliant with new regulations issued by IRDA.
Others life insurers including ICICI Prudential, Birla Sun Life, TATA AIA and SBI Life are also planning to launch their product suit next month.
vinay mohanty

5 major changes in life insurance policies from Jan 1, 2014 – How it affects you ?

Some major changes are going to happen in life insurance industry from Jan 1, 2014, especially in traditional policies like Endowment Plans, money-back plans and even ULIP’s. You will surely have a LIC policy or any other private sector traditional plans or might buy them in coming times. Here are 5 major changes which you should be aware about and they will come  into effect from Jan 1, 2014.
1. Service Tax introduced in LIC Policy Premium
Till now LIC was not charging the service tax of 3% from the customers and paying it to govt from the pool of money collected itself, but now the service tax will have to be charged separately from policy holders. Which means that if your LIC premium was Rs 50,000 per annum, now it will be 3.09% higher in first year, which is Rs 51,500  and after 1st year, it will be 1.545% as permoneylife article.
While customers see it as additional burden, note that its not the case exactly, Earlier – LIC was paying the service tax from the pool of money collected from investors only, which reduced the bonus amount given back to them. But now because it will not be taken out from the funds, that means the bonus declared each year will go up by that much margin and will come back to investors only. Note that Pvt companies were charging the service tax already, so nothing changes on their side. Only LIC was not charging it separately, which they will have to do from Jan 1, 2014 deadline.
2. Increase in Surrender Value
One of the major changes which has happened, is the change in surrender value for policy holders. The rules of surrender value depends on the premium paying term of the policy. If the premium paying term for policy is less than 10 yrs. Then the policy will acquire the surrender value after paying premium for 2 yrs (earliar it was 3 yrs), however if the premium paying tenure is more than 10 yrs , then the surrender value will be acquired only after paying 3 yrs premium.
In both the cases, the minimum surrender value would be 30% of the premiums paid without excluding the first year premium. Note that earlier, if you used to surrender after paying 3 premiums, you got 30% of premiums paid MINUS first year premium, but now as per new rules, the first year premium will not be deducted. Learn everything about LIC policies working before Oct 1
Another good change is that, from 4th-7th year, the minimum surrender value would be 50% of the premiums paid, and has to reach 90% of premiums paid in last 2 yrs of policy paying tenure.
3. Possible Decrease in Premium on LIC Policies
There is a great possibility that the premiums on LIC policies will come down by some margin, because the mortality rates will now be revised by LIC in calculating the premiums.
Mortality rates are the rates at which the insurance company deducts the fees for insuring you based on your age. LIC had been using old mortality rates till now, but now they will have to use new mortality rates . Just to give you an idea on reduction of premium, when I check the mortality rate for a 40 yrs old person in old table, its 0.001803 . But in new rates its 0.002053 . Which is approx 10% better. Lets not go into detailed calculation at the moment, but your risk premium part should go down by 10% (not the full premium, because only some part of whole premium in traditional policies are risk premium and rest is investment part) .
4. Higher Death Benefit
If the policy holder is above 45 yrs of age, then the Sum Assured has to be more than 10 times the annual premium, and for those who are less than 45 yrs old, it can be minimum 7 times the premiums. Note that for claiming the tax exemptions, your sum assured has to be 10 times the base yearly premium. So when you buy the policy in-case, you need to keep it in mind. BasuNivesh has done a great point by point notes on each aspect of regulation, in-case you want to go into details.
5. Agents’ incentives have now been linked to the premium paying term
Now agents commissions is linked to the premium paying tenure. Earlier a lot of agents used to sell the policies which had higher maturity tenure, but limited premium paying tenure (like 30 yrs policy with 10 yrs premium payment) . Here is the new commission structure taken from Moneylife article 
In case of regular premium insurance policies, a policy with a premium paying term (PPT) of five years will not pay more than 15% in the first year. Products with PPT of 12 years or more will have first year commissions up to 35% in case the company has completed 10 years of existence and 40% for the company in business for less than 10 years.
vinay mohanty

LIC NEW PLANS LANCHING ON 1 1 2014

LIC’s Money Back Plan -20 years
LIC’s Money Back Plan -25 years,
LIC’s New Endowment Plan,
LIC’s New Jeevan Anand Plan,
LIC’s New Bima Bachat Plan,
LIC’s Single Premium Endowment plan
,
LIC’s New Jeevan Nidhi Plan
are launching on 01/01/2014

all these plans have service tax 3.09 on first year
and 1.545 for renewals apply
 waiting for premium charts 
vinay mohanty

Service tax in respect of Modified Jeevan Aarogya plan.and other plans

Finance & Accounts Department – Central Office, ‘Yogakshema’, Jeevan Bima Marg, P.B.No.19953, Mumbai


CO/F&A/Service tax/102                                                                                11.12.2013
Circular No.EDA/ZDB/965


TO ALL THE OFFICES OF THE CORPORATION

RE: Service tax in respect of Modified Jeevan Aarogya plan.

Under Modified Jeevan Aarogya plan, following points in respect of service tax may be noted:
  • The service tax shall be payable by the policyholder on the premium including extra premium, if any, as per the prevailing service tax rates. The prevailing service tax rate for the F.Y. 2013-14 applicable to Modified Jeevan Aarogya plan is 12.36% (including Education Cess @2% and Higher Secondary Education Cess @1%).
  • Service tax and the rate of service tax is applicable as per the amendments in Service tax laws from time to time.
  • Service tax @12.36% shall also be collected on the cooling off charges recovered, if any.
  • Service tax collected on premium @12.36% shall be refunded to the policyholder on cancellation during the cooling off period.
  • The above service tax provisions are applicable to the whole of India except Jammu & Kashmir.
Yours faithfully,

Executive Director (F&A)
000000000000000000000000000000000000000000000000000000000000000000000000000

Finance & Accounts Department – Central Office, ‘Yogakshema’, Jeevan Bima Marg, P.B.No.19953, Mumbai

CO/F&A/Service tax/102                                                                                20.12.2013
Circular No.EDA/ZDB/966

TO ALL THE OFFICES OF THE CORPORATION


RE: Service tax rates for the F.Y. 2013-2014


As per Rule 6(7A) of Service tax Rules, the Insurer has the option to pay service tax on life insurance business on the following basis w.e.f 1.4.2012 which is also applicable for the F.Y. 2013-2014:

(i) @12.36% on the gross premium charges from a policyholder reduced by the amount for investment or savings on behalf of the policyholder, if such amount is intimated to the policyholder at the time of providing service
(ii) @12.36% on the premium where the entire premium paid by the policyholder is only towards risk cover in life insurance
(iii) 3.09% of the premium charged from the policyholder in the first year and 1.545% of the premium charged from the policyholder in the subsequent year (for all the remaining policies which are not covered under (i) and (ii) mentioned above)

Kindly note that the above mentioned service tax rates includes Education Cess and Higher Secondary Education Cess (HSEC)

Type of plans for Service tax rates:
1.ULIP plans and ULIP type plans
For all the ULIP plans, service tax (including Education cess and HSEC) shall be charged @12.36% on the charges. For Non Linked plans (which are ULIP type) service tax (including education cess and HSEC) shall be charged @ 12.36% on the charges.

2.Terms Plans and Health Plans
For Term Assurance plans and Health plans where the entire premium is towards rsik premium, service tax (including Education cess and HSEC)shall be charged @12.36% on the premium (i.e. first year premium, renewal premium and single premium)

3.Other Plans
For Conventional plans, Endowment plans, Annuity and Pension plans service tax (including Education Cess and HSEC) shall be charged @3.09% on new business premium (i.e. first year and single) and 1.545% on the renewal premium.

Kindly note the below mentioned points:
  • Service tax shall be payable by the policyholder on the additional /top up/extra premium as per the rates defined for type of plans mentioned above. 
  • Service tax collected on premium shall be refunded to the policyholder on cancellation during the cooling off period.
  • Service tax calculated @12.36% on mortality charges, proportionate risk premium, accident disability rider, cooling off charges, if any shall be recovered from the policyholder on cancellation of the policy during the cooling off period.

  • Service tax and the rate of service tax is applicable as per the amendments in Service tax laws from time to time.

The above mentioned service tax provisions are applicable whole of India except Jammu and Kashmir.

Yours faithfully,

Executive Director (F&A)

Finance & Accounts Department – Central Office, ‘Yogakshema’, Jeevan Bima Marg, P.B.No.19953, Mumbai

CO/F&A/Service tax/102                                                                                20.12.2013
Circular No.EDA/ZDB/967

TO ALL THE OFFICES OF THE CORPORATION

RE: Service tax rates for New Plans

We herewith state below the service tax rates for the below mentioned plans.

LIC’s Money Back Plan -20 years, LIC’s Money Back Plan -25 years, LIC’s New Endowment Plan, LIC’s New Jeevan Anand Plan:
Since these are Endowment plans, the service tax (including Education cess and HSEC) shall be charged @3.09% on the first premium and other first year premium and 1.545% on the renewal premium


LIC’s New Bima Bachat Plan, LIC’s Single Premium Endowment plan:
Since these are Endowment plans, the service tax (including Education cess and HSEC) shall be charged @3.09% on single premium.

LIC’s New Jeevan Nidhi Plan
Since this is a Pension plan, service tax shall be charged @3.09% on the first premium, other first year premium and single premium and 1.545% on the renewal premium.

Kindly note that the provision of Service tax mentioned in our circular ref: ZDB/EDA/966 dated 20.12.2013 shall continue to apply.



Yours faithfully,
Executive Director(F&A)





newbusiness closing date and other info

new business cloging

vinay mohanty

NEW BUSINESS CLOSING FOR THE DECEMBER 2013 DETILES



vinay mohanty

IRDA to bring Common Service Centres for selling simple policies in rural areas

IRDA to bring Common Service Centres for selling simple policies in rural areas 

HYDERABAD: The Insurance Regulatory and Development Authority (IRDA) is roping in Common Service Centres as a platform for insurers to sell simple policies in rural areas. 

"We are bringing CSCs as insurance brokers to sell policies. In six months time it may come in full-fledged manner. We are going to make test market it in two to three months time," IRDA Chairman T S Vijayan said. 

Common Service Centres, a cornerstone of the National e-Governance Plan, offers web-enabled .. e-governance services in rural areas. 

"For the test market, we are in discussions with some companies. We select some districts where this e-seva has taken up really well and companies should also be comfortable in selling in those areas," he told reporters on the sidelines of a programme organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry. 

In his speech, Vijayan said the aim of the project is to ensure that insurance penetration goes up in rural areas. 


"They (CSC) will be selling simple insurance products such as tractor insurance, vehicle insurance," he said. 

The insurance penetration in India is pegged at 3.84 per cent and has the potential to go up to 6 per cent in coming years, he noted. 

According to him, assets managed by all the insurance companies are worth Rs 20 lakh crore. 

Replying to a query on Bancassurance, he said discussions are going on to make banks as brokers rather than agents. 

Vijayan said .. 


Salient features of Lokpal, Lokayuktas Bill which is passed to day

Following are some important features of the Lokpal and Lokayuktas Bill, 2011, passed by Parliament.
** Lokpal at the Centre and Lokayukta at the level of the states.
** Lokpal will consist of a chairperson and a maximum of eight members, of which 50 per cent shall be judicial members.
** 50 per cent of members of Lokpal shall be from SC/ST/OBCs, minorities and women.
** The selection of chairperson and members of Lokpal shall be through a selection committee consisting of Prime Minister, Speaker of Lok Sabha, Leader of Opposition in the Lok Sabha, Chief Justice of India or a sitting Supreme Court judge nominated by CJI, eminent jurist to be nominated by the President of India on the basis of recommendations of the first four members of the selection committee.
** Prime Minister has been brought under the purview of the Lokpal.
** Lokpal’s jurisdiction will cover all categories of public servants.
** All entities receiving donations from foreign source in the context of the Foreign Contribution Regulation Act (FCRA) in excess of Rs 10 lakh per year are brought under the jurisdiction of Lokpal.
** Provides adequate protection for honest and upright public servants.
** Lokpal will have power of superintendence and direction over any investigation agency including CBI for cases referred to them by Lokpal.
** A high powered committee chaired by the Prime Minister will recommend selection of the Director, CBI.
** Directorate of Prosecution headed by a Director of Prosecution under the overall control of Director.
** The appointment of the Director of Prosecution, CBI on the recommendation of the Central Vigilance Commission.
** Transfer of officers of CBI investigating cases referred by Lokpal with the approval of Lokpal.
** The bill also incorporates provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.
** The bill lays down clear time lines for preliminary enquiry and investigation and trial and towards this end, the bill provides for setting up of special courts.
** A mandate for setting up of the institution of Lokayukta through enactment of a law by the State Legislature within a period of 365 days from the date of commencement of the Act.

Replacement Cost vs. Actual Cash Value of house in insurance terms

vinay mohanty

andhrapradesh bifurcation bill telugu

‘Missing person’s death date is day court declares so’

‘Missing person’s death date is day court declares so’
Jehangir B Gai
How is the date of presumed death to be reckoned in case of a missing person
Background: Legal heirs or beneficiaries are entitled to claim a deceased person’s property. But what happens when a person goes missing and remains
untraceable? When and how do the legal heirs claim the property?
Case Study: Jeet Singh did not return home from office on October 10, 2001. His wife, Raj Bala, lodged a police complaint stating that her husband had
been kidnapped. The police registered an FIR on November 3, 2001.
Singh had taken two insurance policies from LIC on January 20, 1999. One policy was for a sum insured of Rs 50,000, while the other was for Rs
2,00,000. Bala informed the insurance company that her husband had been kidnapped and was missing. However, the insurance company did not respond.
Meanwhile, Bala continued paying the premium for the policies. The premium for one policy was paid till January 13, 2007, while for the other till January 26,
2008.
On May 9, 2009, Bala filed a suit before the civil judge, Sonepat, for a declaration that her husband is dead and decree. The court passed an order May
21, 2010, declaring Singh to be dead and also issued a death certificate. Bala asked the insurance firm to settle the policy claims. The company sent a
cheque of Rs 10,000, which Bala refused to accept. She filed a complaint before the district forum making a grievance about the insurance company asking
her to keep paying the premium to keep the police alive.
The dispute was whether Singh should be considered to be dead on October 10, 2001, when he went missing, or when the court pronounced him dead in
its order on May 21, 2010.
The forum held that both the policies had lapsed and directed the company to pay their paid up values. Bala’s appeal to the Haryana state commission
was also dismissed. She then filed a revision before the national commission.
She argued that even the district court had held that her husband was missing from October 10, 2001, and had declared him dead as per the court’s May
2012 decree. She contended that
the date of her husband’s death should be considered to be October 10, 2001. She said there was no unpaid premium as on October 10, 2001, so she
should get the entire sum insured rather than just the paid up value.
Publication: The Times Of India Mumbai;Date: Dec 16, 2013;Section: Times City;Page: 6

Corporate agency license of banks will not be renewed, says Rajiv Takru

Now, banks who wish to sell insurance policies will have to take insurance broking license.
Corporate agency licenses of banks under bancassurance model will not be renewed, said Rajiv Takru, Secretary
(Financial Services), Ministry of Finance at an event ‘Insurance Agenda’, organized by Bloomberg TV in Mumbai.
Earlier, under the bancassurance model, banks were allowed to act as corporate agent of only one life insurance
company and one general insurance company.
Typically, many banks are corporate agents of their promoter’s group company. Henceforth, banks who wish to sell
insurance policies will have to take insurance broking license. If they opt for a broking license, banks will be able to
sell insurance policies of five each for life and non-life companies.
On the sidelines of event, Takru told Cafemutual that the Ministry is also planning to put a cap on the sales of
promoter group’s insurance policies by the insurance brokers. “There will be no dominant player in insurance broking
model. It will stem mis-selling and establish fair business practice.”
Earlier, IRDA mandated banks to sell only 25% policies of any single insurer. IRDA said, "Not more than 25 per cent
of insurance handled by the insurance broker in any financial year is placed with the insurance company within the
promoter group, separately for life and general insurance business.”
Takru struck an optimistic note, “Allowing banks to act as an insurance broker would be a game changer for the
industry. Earlier, banks were allowed to act as corporate agents where they represented insurance company before
policyholders whereas under insurance broking model, they will represent interest of policyholders before insurance
companies. It will reduce mis-selling, increase insurance penetration, decline dropout rates and built trust among
people.”
Recently, RBI came out with a draft circular in which it had notified that banks having net worth of Rs. 500 crore can
act as insurance brokers. Only large banks fall under this criteria and most of them are selling insurance policies of
their group company. Industry experts said that these banks were unwilling to change their model.

With critical insurance policy, live a worry-free life

Life expectancy of Indians is increasing. A study published in the British Medical Journal 'The Lancet' revealed that the Life Expectancy (LE) at birth of an average Indian male increased by 15 years between 1970 and 2010 and the same for a woman increased by 18 years. The report pegged the life span of an average Indian male to be 63 years while that of a woman is 67.5 years. 

While all this is nice to hear, what does it really mean for the average Indian? Simply this, that we now live a longer, fuller life. If you read between the lines, a longer life also means higher chances and incidence of ailments and diseases, given old age; which in turn translates to higher medical costs and expenses. 

The World Health Organization has disclosed the top 20 diseases that cause deaths among Indians - Coronary Heart Disease, Cancer, Kidney Failure, Heart Attack are some of them. Most of these diseases come at heavy treatment costs. Added to that, most Indians who need treatment for these diseases dip into their savings to pay for them. 

A smart health insurance policy is critical not only to ensure that medical costs and hospitalization expenses are covered, but also for you to continue living life the way you have been before the incidence of the disease / ailment. If you haven't deep-dived into picking the most optimum health insurance that will provide maximum cover even in your old age yet, you can start now. There are a few key parameters that you need to keep in mind while choosing a comprehensive health insurance policy. .. 

A Critical Insurance (CI) policy, like the one provided by Bharti AXA General Insurance is one such smart health insurance policy that provides cover for the patient as well as his or her family. Some parameters you need to look at while buying a CI cover 

Number of illnesses covered: Choose an insurer that covers more illnesses. IRDA has recently regulated that it is mandatory to cover at least 12 critical illnesses by insurers. Bharti AXA GI covers up to 20 critical illnesses. 

> Benefit policy: Look for an insurer that provides an option of either cashless reimbursement or benefit policy. A benefit policy gives you lump sum compensation that can come in handy not just for treatment but also for day to day expenses. Remember though that there is a survival period of 30 days post the diagnosis of a critical illnesses for the lump sum compensation to be given 

> Floater Policy : Ensure that you choose a floater policy - this simply means one policy for the whole family, i.e. during the policy period, in case either the insured or spouse or 2 kids are diagnosed with a CI, then the policy will come into play. There are only a few companies that offer this, so please ensure you opt for one. 

Start early: Younger the age, lower the premium. There is also a renewal disc of 5% available for every claim free year. Also given that Critical illnesses have begun to strike early it is good to have a CI policy sooner than later. 

Coverage for Pre Existing Diseases : Only few insurers cover Pre Existing Diseases, but only after a waiting period of 4 years. That is another reason to start your CI cover early 

Adequate Sum Insured: Ensure that you have an adequate sum insured to cover a major illness. But remember the thumb rule - The higher the SI, higher the premium you pay. Ensure that you have at least a 5 lakh SI, so that you are adequately covered. 


> Read Exclusions very carefully: To ensure that you know what is covered and what is not, please read the inclusions and exclusions carefully before you buy your CI policy 

Bharti AXA's Critical Illness plans can come at very low, affordable premiums and provide a cover of up to INR 5 lakh. Further, they also provide tax benefit under section 80 D and renewals can be bought at discounts of 5% every year up to a maximum of 25% on a progressive scale! For more details  ..