e_IA making lifeinsurance policys 10% cheaper

On January 19, 2015
insurance_repositoryIf you opt for life insurance policies in electronic format, you can get 10-15% discount on your life insurance policy premium. This is because the Insurance Regulatory and Development Authority of India (IRDAI) has revised guidelines with regard to repositories and dematerialization of insurance policies.
According to these guidelines, insurers can offer discount in premium in respect of those policies maintained only in the electronic form.
Dematerialization of insurance policies is done by five insurance repositories. The objective of creating an insurance repository is to provide customers the facility to keep policies in electronic format. Keeping insurance policies in electronic form provide safety from misplacing.
Besides, the IRDAI revised norms for outsourcing of both core and non-core activities mentioned in outsourcing guidelines to insurance repositories. This may help insurers outsource the core activity such as policy servicing function to specialist, who can not only provide front office presence, but also execute service request thereby reducing cost of operations and improve in turn around time.

INSURANCE AGENTS COMMISSION NORMS TO BE REVISITED

On January 14, 2015
commissionThe Insurance Laws (Amendment) ordinance has omitted section 40A of the erstwhile Act. This means, the Insurance Regulatory and Development Authority of India (IRDAI) has to work on a revised commission structure where the existing norms will be revisited.
Section 40A of the erstwhile Insurance Act pertained to limitation of expenditure on commission. According to erstwhile Insurance Act, no insurance agent would get a commission exceeding 7.5% of the first year’s premium and 2% of each renewal premium payable on the policy, where the policy grants a deferred annuity in consideration or more than one premium.
In cases, where the policy grants an immediate annuity or a deferred annuity in consideration of a single premium, or where only one premium is payable on the policy, it could not exceed 2% of that premium. In any other case, it could not exceed 35% of the first year’s premium, 7.5% of the second and third year’s of the renewal premium and thereafter 5% of each renewal premium payable on the policy.
Provided that in other case referred above, an insurer, during the first ten years of his business could pay to an insurance agent and an insurance agent may receive from such an insurer, 40% of the first year’s premium payable on the policy.
Insurers have proposed to IRDAI that there should be balance between the first year and second year commissions on savings policies. This will motivate the agent to persuade the customer to keep paying the premiums even in the second year, where the cases of lapsation are high.
The traditional product guidelines that were implemented from January 1, 2014, had linked commission to tenure of a policy. Higher the duration, higher is the commission.
In order to retain agents for longer duration, there have been talks about having a fixed salary structure for them. However, not everyone is in favour of such a structure. Insurers say that for large insurers having a large agency force, a fixed salary structure can set them back by a huge expense. They would then have to drastically reduce the number of agents, affecting overall business.
There are also proposals on having a commission expense cap, rather than a fixed percentage of commissions.
For a customer too, if the commission structure is revised, the premiums will also be revised. More balanced commission structure between the first and second year of the premium paying term would mean that the first year premiums would be slightly revised downwards.

Three men have been arrested in west Delhi for cheating on the pretext of providing a Life Insurance Corporation bonus of Rs 2.4 lakh

Cheats target LIC customers
New Delhi, Jan 11, 2015, DHNS:
A A
Three men have been arrested in west Delhi for cheating on the pretext of providing a Life Insurance Corporation bonus of Rs 2.4 lakh. The gang targeted LIC and MTNL's customers, police said on Saturday.

The accused have been identified as Keshav Kumar, 28, Gurpal Singh, 25, and Pawan Pal Singh, 26. The gang was busted after a victim named Yashpal Dhawan approached Rajouri Garden police station. Yashpal had been receiving phone calls in which the caller introduced himself as an official of LIC's head office in Mumbai.

"The caller informed that Yashpal had won a bonus of Rs 2.4 lakh from LIC," said Pushpender Kumar, Deputy Commissioner of Police (West). Yashpal was asked to provide his voter ID card, two photographs and a processing fees of Rs 30,000. They claimed the fee had to be paid through cheque and the amount will be refunded with the bonus.

Yashpal had been told to send the cheque through courier, but he refused and asked the caller to send an employee to collect it. On January 2, a man met Yashpal and took the cheque of State Bank of India. On the same day, Yashpal contacted LIC, but found that he had been duped.

Over Yashpal's statement, a case of cheating was registered with Rajouri Garden police station. The police team contacted the courier company and apprehended Keshav, Gurpal and Pawan. They told police that a man named Rupinder is the mastermind of the conspiracy.
Rupinder was working with Reliance Life Insurance, but was not satisfied with the job.

In April 2014, he came in contact with a man named Ram Singh, who asked him to open a call center and sell membership of his City Club and ICI Club. "Rupinder opened a call center. But nobody was willing to take the membership of the clubs," Kumar added.

Rupinder then hatched a conspiracy to cheat people on the pretext of bonus in LIC. He involved Pawan and Gurpal to obtain a list of residents having MTNL landlines connection. They analysed that MTNL phones were mostly used by senior citizens.

They asked victims to pay money ranging from Rs 15,000 to 50,000 as processing fee which would be refunded. Pawan worked in a call centre operated to contact victims.
vinay mohanty

HAPPY MAKARA SANKRANTI TO ALL MY FRIENDS AND LIAFIANS


vinay mohanty

On- line direct selling of Insurance Vis-à-vis Section 41 of Insurance Act,1938

                                         Reg: with A/D                                                                                                                                                                 Oct 20, 2014                                                                        Shri  T.S.Vijayan                                                                                                                        
Chairman, IRDA
Parishram Bhavn (3rd floor)
Basirbagh
Hyderabad- 500 004
                                                                                                                         

Dear Sir,

Sub: On- line direct selling of Insurance  Vis-à-vis  Section 41 of Insurance Act,1938 

Government appointed panel (chaired by shri D. Swarup) FINWEB’s recommendations on the common    minimum standards for millions sellers of Insurance, pension and mutual fund products has been put in the shelve to settle dust on it.

“Agents commission embedded in the premium be cut” was one of the recommendations made by the panel (FINWEB).

 But Shri J. Hari Narayan ,IRDA Chairman then had strongly opposed the proposal to remove agents commission from policyholders premium.
An earlier panel set up by High Level committee on Financial Matters (HLCFM) and chaired by the  former IRDA  chief C.S. Rao also favoured continuing the existing arrangements for financial intermediaries . But it is observed that the Nationalized Insurer LICI and private Insurers both, in contradiction of above, have been operating on-line selling of Insurance directly to the Insuring  public at reduced premium .The amount of this reduction in premium is more than agents commission embedded in the tabular premium. Subsequent premium under ‘on-line policies’ remain same whereas agents get commission @5% on subsequent premium of the policies Sold by them.
Now the questions arise:
1.       Did IRDA grant any  license to Insurers for selling of Insurance directly to Insuring Public ?
2.       Does Insurers  not  create a discrimination between the ON-LINE  policyholders and     AGENTS-SOLD policy holders?                                                             
3.       All  Insurance both life & non- life  print in their proposal forms about ‘prohibition of rebate’ quoting the provisions under section 41 of Insurance Act,1938.
 Why will IRDA not treat the ‘On-line direct selling’ of Insurance at reduced  premium as Rebating and   take proper action?

Decades back G.I.C controlled PSU  Companies depriving agents from commission ,would allow a discount  (equal to agents commission) to the policy holders on the premium of their assigned policies.

Attention of N. Rangachari ,  then Chairman IRA ,was drawn to this aspect  in a seminar held on 13.11. 1998 at Kolkata . He had treated the matter as a serious violation of Insurance Act 1938 (Section 41) and took action immediately  after his return to H.Q resulting discontinuation of the years old malpractice . And thereafter  Insurers  started paying  commission to agents also on  assigned policies.

Millions of Life Insurance agents in the country urge upon you to maintain sanctity of the Insurance Act and STOP ON- LINE SELLING .

Eagerly looking forward to your early action .

Thanking You .

Yours Faithfully,





Grievances of Mediclaim Policy Holders Against PSU & Non PSU Insurance Company and their TPA’s

Grievances of Mediclaim Policy Holders Against PSU & Non PSU Insurance Company and their TPA’s

Sir,
This application attempts to highlight the various unethical and inhuman practices adopted and implemented by different PSU Insurance Companies and the TPAs associated with them by means of carefully crafted policy conditions which deceive the policy holders even during the critical phases of treatment. It also throws light on the unfavorable experience of the defrauded policy holders as well as the inconvenience faced by agents who are assigned the task of Mediclaim Policy Servicing for the same.
We sincerely hope that through the use of powerful reports and visual media, the common population will be made aware of these unethical practices and if need be, sufficient pressure will be exerted on the IRDA to revise their rules and implement them wisely.
Please consider the premium tariff of the PSU Insurance Companies: The policy premium is being raised every year.The premium of the Family Floter Policy has been nearly doubled (case in point, UIIC) whereas the benefits associated with the Mediclaim have been cut down.
After signing up for the Mediclaim policy, the policy holder is given a certificate along with a booklet of the policy conditions drafted in heavy, technical terms and deliberately printed with tiny font size. We consider it ‘Black Policy’, since they have been devised to hide corrupt practices in the veil of Law so that the Claims Process of the policy holders can never reach 100%.
These conditions are implemented in such a way, that even the Genuine Claims of policy holders face unnecessary obstacles or are denied or refuted altogether. As a result, policy holders are unable to attain settlement of their claims and face severe financial crises despite holding Mediclaim Policy.
According to the conventions, the premium of a Mediclaim policy depends on the coverage chosen by the policy holder at the time of application. If coverage of 3 lakh is chosen, the holder is assured that their medical expenses within the coverage will be taken care of, either by the Cashless System or by the Reimbursement Process. But in reality, the policy holder is forced to face a lot of obstacles positioned by the PSU Insurance Companies and their appointed TPAs, in the shape of Capping on the hospital room rent, doctor’s bill or Investigation Bill which hamper the Claims Settlement Process. Moreover, there exists a technical term ‘Proportionate Deduction’. By taking undue advantage of this, the coverage of medical expenses is cut down by almost 67%, which is unfair as well as inhuman.
In case of United India Insurance Co., during the Claims Process separate money receipt issued by the doctor stating the professional fees or the charges of the team are not accepted. These have to be forwarded through the hospital or nursing home authorities in order to be considered for claims settlement. This is quite ridiculous since it is a well-known fact that most renowned doctors are not directly appointed by the hospitals. They only use the facilities or infrastructure of these institutions for treatment. Hence, the hospital bills and the doctor’s bills are prepared separately. How can the doctor’s bill get forwarded by the hospital in such a situation and why should the hospital bear the liability? So the Company steers clear of the bulk of the expense (the doctor’s fees) and only the minor hospital expenses are covered. We must also consider the attack on the social status of the renowned doctors whose receipts are not accepted for Claims Settlement despite being honest and legal. Unfortunately, repeated complaints to the higher authorities have not yielded much result.
Another fact that has to be drawn to attention is that the insurance companies have presently stopped giving the legit No Claims Bonus for those holding Unclaimed Policies. So the defrauded holders are left with no benefits whatsoever.
Several medical conditions call for day-care treatments instead of hospitalization. While the coverage for these expenses are denied by PSU Mediclaim Policy, several Non-PSU Companies have stepped forward to extend their coverage in these cases as well.
PPN-approved hospitals and nursing homes are tied with PSU Insurance Companies through fixed Package Rates for different medical conditions, to be availed of by Cashless System. But some institutions are illegally extorting surplus money from the policy holders through unfair means. This is mostly done by conspiring with the TPAs and making the patient party sign the Anexture ‘C’ form. Since the Insurance companies won’t bear the brunt, it leads to unnecessary financial losses.
Those employed by the Insurance Companies, ranging from officers to 4th class staff, seem to have grown too complacent with the security of Government Service and the lack of disciplinary action. They bear little responsibility towards the company itself or its associated clients. They have practically no interest in the development or growth of the business. Many employees do not even have adequate knowledge regarding the subject. This has a negative impact on the process of proper servicing and settlement of the Mediclaim Policies. It has also created a huge communication gap between the Insurer and the Insurance Company. It is necessary for the employees to understand that accepting cheques is not their only duty. They must ensure reliable service and a healthy relationship with the clients as well.
Often, new proposals are not accepted if there are quite a few risks of claim. Proposals for new policy by those above 60 years age are turned down even if there are no such rules stated in the IRDA or Insurance Company Circular. Similarly they often refuse to enhance existing policies. Requests for Top-Up and Super Top-Up policies are also met with baseless excuses. This non-cooperative attitude is counter-productive and must be eradicated at any cost.
It is requested that the claim ratio of the Insurance company staff and that of their relatives be brought to light. It raises a question: Do they have to face so many hassles during their claim?
It must be brought to notice whether the TPAs affiliated in absolutely honest ways. If so, why do so many of them lack even the most basic infrastructure? At this point, it is necessary to elaborate on the role of the TPAs. These are introduced to reduce the claim ratio of the Insurance Companies and also to monitor them. The additional 6% that the policy holders have to pay with their premium goes to these TPAs for maintenance. Though, isn’t it quite questionable how this meagre amount is enough to run such establishments? Actually, these establishments have been trained to create complications in the claims settlement process. The make use of 64 VB, Proportionate Deduction and other twisted mechanisms to hamper, delay and repute claims.
The cards sent by the TPAs rarely reach the policy holder in time. If they do, they are filled with errors, be it in information or spelling. The correction of these takes up a lot of valuable time. Sometimes, calls from policy holders are not received at critical moments and there have been reports of misbehavior too.
There has been a lot of doubt regarding the qualifications of the members of the Medical Teams appointed by the TPAs to analyze the details of the claims (“Quacks” & Homeopathy degree holders and others). As a result of this, the genuine claims of policy holders under the treatment of qualified doctors are being challenged on a regular basis.
The masses have the right to know whether the Claims Settlement Process is being conducted ethically; they also need to know whether there is proper monitoring over the institutions by IRDA/Insurance Ombudsman/Health Department of India/Finance Departmentof India.
Representatives are sent by the TPAs to enquire the patients (during the course of treatment) regarding pre-existing diseases to find out whether information had been withheld while starting the policy. The mode of this interrogation is quite akin to that of criminal investigation and the policy holder can get unnerved easily, given that they are already in a weak state. Thus, the claim gets denied without much reason.
The premium paid by a policy holder with 1 lakh coverage is much lower than that paid by a policy holder with 5 lakh coverage. But in several cases, the package rates for treatment set by Insurance Companies are equal for both. Is this reasonable?
Several hospitals and nursing homes are misusing Mediclaim Policies to add to personal profits. For this, they resort to unfair practices in form of unnecessary hospitalization, admission to ICU/ICCU/ITU. They also call for investigation without any apparent need and inflate medicine bill amounts to extort the patient party. Sometimes, patients with no hope of recovery are kept on ventilation for the same purpose. As a result, it is becoming increasingly difficult to afford proper treatment.
If this continues, the system will collapse in no time. So, on behalf of numerous policy holders and agents, we would like to plea for simplification of the Claims Settlement Process. The process should be more humane. One-window system should be started to make sure that the policy holders don’t have to face any inconvenience during the period of hospitalization. It should also be assured that the policy holders get their claims settled with respect to their chosen coverage without capping or proportionate deduction (by actual payment basis). We hope that with the help of powerful articles and visual media, the message will reach the likes of Health Department of India, Finance Department, IRDA, Insurance Ombudsman and National Human Rights Commission. We also hope that it will raise the awareness of the masses regarding the matter
Thanking You,
Yours Sincerely,
Chandan, Uttam, Pratap
(On behalf of Policy Holders and Agents)
Mobile no.: 9831115009, 9831609030, 9432302215
E-mail: ghosal.chandan@yahoo.co.in, chandanghosal2014@gmail.com

Copies of this application have been sent to:
Honourable Prime Minister of India
Honourable President of India
Honourable Chief Justice, Supreme Court
Ministry of Health,
Ministry of Finance,
Central Human Rights Commission
IRDA
Insurance Ombudsman
IMA
Honourable Chief Justice, High Court
Honourable Chief Minister, WB

Honourable Minister, Consumer Forum

Deduction of Income Tax at source from sum under Life Insurance Policy in terms of section 194DA




The Chairman
Central Board of Direct Taxes (CBDT)                                                         December 30,2014
Government of India
ARA center
E-2, Jhandewalan extension
New Delhi-110055

Dear Sir,


Re: Deduction of Income Tax at source from sum under Life Insurance Policy in terms of section 194DA                      of the Finance Act,2014/                                       
                                 
Any sum over there sold limit of Rs1 lac received including bonus under Life Insurance Policies which is not exempted under section 10(10D) of the Income Tax act,1961 would now be subject to deduction of tax at source w.e.f 01/10/2014 @2% if the Policy holder provides valid PAN, otherwise it will be 20% on the gross amount.

Sum Assurance depends on the premium payble during the term of the policy . This premium is deposited from ‘post tax income’ of the tax payee policyholder or from income of the non-tax payee policyholder.

Sum Assurance designed by the insurers based on premium accumulated for years in case of regular -premium policy and single premium , incase of single- premium policy. Many times premium exceeds the amount of Sum Assurance due to  loading of extra. In other words accumulation  of premium during the term of the Policy constitutes the principal i.e. Sum Assured (like recurring deposit of Bank & Post Office) which should not come under the purview of “Income” and thus not chargeable to tax.

What is the provision of the Constitution of India to levy Income tax?

“The Central Government has been empowered by entry  82  of the union list of schedule  VII of the constitution of India to levy tax on all income other than agriculture  income subject to section 10(1)”

The word ‘income’ in its broad sense, is the gain derived  from capital, lab our or a combination of the two. It is distinguishable from the capital itself.

“The Government of India imposes tax on taxable income  of all persons including individuals ,HUF, companies forms etc.The levy is governed by Income Tax Act,1961”.Section 194DA of the Finance Act,2014 has not distorted the ‘nomenclature’ of ‘Income tax’ but also it has defeated the spirit of the schedule VII of the Indian Constitution .
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Now the question arise:

1 . Why is levy of tax on sum Assurance (i.e principal) of LIC policy?

2 . Why are Bank deposits  (i.e. principal) exempted  from section 194DA of the finance act 2014?

3 . Why is LICI be left out of the provision of form 15H/G?

4 . Does the section 194DA not discriminate LICI from Bank?

People buy Life Insurance Policy sacrificing their present comfort because they feel ”it is only by the insurance policy some of the tears of the widow may be wiped away and some of the cries of fatherless be hushed, because the best substitute for a father on this side of the world is Life Insurance “.

In this context shri T.S Vijayan, Chairman of Insurance regulatory & development Authority (IRDA) stressed that there must be a concerted efforts between the Insurance industry ,the regulator and the Government in creating public awareness about the benefits of Insurance.

But introduction of 194DA allows us to believe that the Government  wants to discourage  its people from taking Life Insurance Policy.No people’s  Government should do so when it can not provide financial security to its people.

Income of many Life Insurance Policyholders does not fall under tax bracket .Many of them may not have PAN card as it is not a mandatory  for all classes of people. Section 194DA compels them to engage tax consultant, on payment of fees ,to recover the amount deducted by LICI as TDS. If this cost is higher than the amount of TDS, Policyholders will prefer to  forego the claim for refund .Should it be desirable for the Government?

Moreover , if section 194DA would not be effective from retrospective  date ,many Life Insurance Policyholders could opt for not taking the policy before the Act came into force.

I hope, you will find reasons to appreciate my analysis and do your best to withdraw the section 194DA and value the concern of the insuring public for their family.

  
Thanking You,

 PC datta

Yours faithfully
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Copy to 1) The Hon’ble Prime Minister ,Government of India
                    Prime Minister Office
                    152,South-Block
                    Rasina Hills
                    New Delhi-110 011
                                                           -For his kind information with the request to take appropriate action as his     
                                                     honour deems feet

                   
                2) The Hon’ble  Finance Minister, Government of India
                     Room No -134
                     North-Block    
                     New Delhi-110 001
                                                     -For his kind information with the request to take appropriate action as his     
                                                     honour deems feet