vinay mohanty
This Blog provides you UpToDate information on life & General insurance dealing mostly with LIC's New Plan Circulars, MillionDollarRoundTable tips on marketing,Financial analysis and INCOME TAX.
Insurance Bill – Details of the amended provisions
Re.: Insurance Bill – Details of the amended provisions
******
Lok Sabha have approved and passed the Insurance laws amendment bill.
Subsequently Rajya Sabha have also given its consent.
The amended Life Insurance Act have come into stay.
What are the important features which will have a bearing on Life Insurance Agents. Let us analyze.
1) Section 40A of the Insurance Act, 1938 which capped agents commission on Insurance products
does not find mentioned in the new bill. In other words, the fixation of commission is left to the
decision and discretion of IRDA of India, which will provide guidelines to Life Insurance Companies.
2) Claim rejection:
The revised insurance laws allow the insurer to challenge a policy holder for mis-representation of facts
or fraud only in the first three years of the policy.
In such cases, If there is misrepresentation or omission of facts or fraud, the insurance company can
challenge the claim.
The onus is on the policy holder or nominee to prove that statement or suppression of the fact was not
done deliberately.
If the policy holder is not alive, the obligation falls on the shoulders of the nominee.
Earlier the Insurance Companies were allowed to challenge the policy holder in the first two years of the
policy term on the grounds of fraud.
After the first two years, the insurer could still dispute the claim. But in order to do so, the
insurer had to prove that the policy holder had deliberately had committed the fraud.
However the new bill is very clear in this respect.
A policy can’t be disputed after expiry of three years on any grounds.
After three years, the policy holders are assured that the Insurance Company will never
reject claim, once the complete three years on the policy.
Conti….
-2-
Please note, that in the year 2013-14, some of the private players had repudiated as many as 15% of
the claim lodged with them.
3) An amendment that makes the difference to the policy holder with regards to the hiring
of agents.
Hereafter the agents will be appointed by the Insurance Companies directly and Insurer will be held
liable all action of the agent.
If an agent commits a fraud and the policy holders suffers, hereafter it is equally the responsibility
of the Insurance Companies to provide relief to the policy holder.
IRDA has been given power to enforce stiffer penalty on Insurance Companies, if the regulator finds out
that there had been violation of regulation in the appointment of agents, it can penalize the agent
with a fine upto Rs.10,000/- , the insurance company can be liable to pay a penalty upto 1
Crore.
Multi level marketing, which as affected the interest of several policy holders is totally
forbidden by the new law.
The new law forbids such multilevel marketing. This is a positive development.
Every agent who deals with the policy holders is directly employed by the insurance
company.
4) The Bill also holds that any agent who offers an inducement to the policy holder (rebate) directly or
indirectly to take or renew an insurance policy will be penalized to the extend of Rs.10 Lacs.
Earlier the penality was just Rs.500/- under section 41(2).
5) An Agent can work with one life insurance company, one general, one health insurance company.
Each agent will be authorized to sell products of one Insurer.
6) Scrapping of Commission Ceiling:
The insurance act of 1938 specified a limits on the commission that could be paid to the agents under
section 40a, the act specifies that in the life insurance business, the commission paid should not exceed
40% of the 1st years premium and 5% of the renewal premium in the traditional insurance products.
In the new bill this section have been removed.
There is no official cap on commission to agents on traditional products.
The commission structure has to be decided by IRDA.
7) However the unit linked policies will continue to have a cap on net reduction in yield of a maximum
of 2.25%.
These all are the important and salient features which affect the policy holders as well as
the agents.
vinay mohanty
******
Lok Sabha have approved and passed the Insurance laws amendment bill.
Subsequently Rajya Sabha have also given its consent.
The amended Life Insurance Act have come into stay.
What are the important features which will have a bearing on Life Insurance Agents. Let us analyze.
1) Section 40A of the Insurance Act, 1938 which capped agents commission on Insurance products
does not find mentioned in the new bill. In other words, the fixation of commission is left to the
decision and discretion of IRDA of India, which will provide guidelines to Life Insurance Companies.
2) Claim rejection:
The revised insurance laws allow the insurer to challenge a policy holder for mis-representation of facts
or fraud only in the first three years of the policy.
In such cases, If there is misrepresentation or omission of facts or fraud, the insurance company can
challenge the claim.
The onus is on the policy holder or nominee to prove that statement or suppression of the fact was not
done deliberately.
If the policy holder is not alive, the obligation falls on the shoulders of the nominee.
Earlier the Insurance Companies were allowed to challenge the policy holder in the first two years of the
policy term on the grounds of fraud.
After the first two years, the insurer could still dispute the claim. But in order to do so, the
insurer had to prove that the policy holder had deliberately had committed the fraud.
However the new bill is very clear in this respect.
A policy can’t be disputed after expiry of three years on any grounds.
After three years, the policy holders are assured that the Insurance Company will never
reject claim, once the complete three years on the policy.
Conti….
-2-
Please note, that in the year 2013-14, some of the private players had repudiated as many as 15% of
the claim lodged with them.
3) An amendment that makes the difference to the policy holder with regards to the hiring
of agents.
Hereafter the agents will be appointed by the Insurance Companies directly and Insurer will be held
liable all action of the agent.
If an agent commits a fraud and the policy holders suffers, hereafter it is equally the responsibility
of the Insurance Companies to provide relief to the policy holder.
IRDA has been given power to enforce stiffer penalty on Insurance Companies, if the regulator finds out
that there had been violation of regulation in the appointment of agents, it can penalize the agent
with a fine upto Rs.10,000/- , the insurance company can be liable to pay a penalty upto 1
Crore.
Multi level marketing, which as affected the interest of several policy holders is totally
forbidden by the new law.
The new law forbids such multilevel marketing. This is a positive development.
Every agent who deals with the policy holders is directly employed by the insurance
company.
4) The Bill also holds that any agent who offers an inducement to the policy holder (rebate) directly or
indirectly to take or renew an insurance policy will be penalized to the extend of Rs.10 Lacs.
Earlier the penality was just Rs.500/- under section 41(2).
5) An Agent can work with one life insurance company, one general, one health insurance company.
Each agent will be authorized to sell products of one Insurer.
6) Scrapping of Commission Ceiling:
The insurance act of 1938 specified a limits on the commission that could be paid to the agents under
section 40a, the act specifies that in the life insurance business, the commission paid should not exceed
40% of the 1st years premium and 5% of the renewal premium in the traditional insurance products.
In the new bill this section have been removed.
There is no official cap on commission to agents on traditional products.
The commission structure has to be decided by IRDA.
7) However the unit linked policies will continue to have a cap on net reduction in yield of a maximum
of 2.25%.
These all are the important and salient features which affect the policy holders as well as
the agents.
vinay mohanty
todays meeting at central office people
Dear friends
after our discussion assurance given by management on these issues
1. second housing loan
2. group insurance up to 10 lakhs
3. ID card given to all agents
4. computer allowance to ZM club agents
5. review of mediclaime
6. review of number of lifes to club members
but result awaited
ds sukla liafi president
-24-03-15-.jpg)
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management comment and convey your opinion
Dear Sirs,
Please read the contents of attachment regarding Management`s comments and convey your opinion for further agitation programme.
Please read the contents of attachment regarding Management`s comments and convey your opinion for further agitation programme.
N. Gajapathi Rao
Secretary General
Secretary General
vinay mohanty
IMF to boost cross selling of financial products
Insurance Marketing Firms (IMF), introduced by the Insurance Regulatory and Development Authority of India (IrdaI) as a new distribution channel will be a one stop shop for all financial needs. They would help to improve distribution reach and boost cross-selling in the Tier-II and Tier III towns.
The IrdaI has allowed Insurance Marketing Firms to solicit and procure products of two life, two general and two health insurers through salespersons. The firms would also have Financial Service Executives (FSEs) who would be able to distribute any product –credit cards, mutual funds or National Pension System (NPS) products, apart from loan products from Non-Banking Finance Companies (NBFCs).
Insurance service providers would have to be school passouts and take a written examination to qualify for the post. The FSEs would be issued licenses by the financial regulators concerned.
The whole idea is to boost penetration and have a cross-selling mechanism through this channel since insurance products could be sold to mutual fund customers and vice-versa, said insurers.
Insurers also say that slow career growth and low remuneration also forces many insurance agents to quit the sector. Therefore, existing insurance agents may also look insurance marketing firms as a new career opportunity. They would be paid a minimum salary of Rs 5,000 per month. FSEs would be remunerated according to the regulations and norms of the sector.
introduction of LIC's new plan jeevan lakshya 833 shortly
Re: INTRODUCTION OF LIC’s JEEVAN LAKSHYA (Plan No.833)
1. INTRODUCTION:
It has been decided to introduce LIC’s Jeevan Lakshya (Plan
No.833) with effect from __ March, 2015.
The Unique Identification Number (UIN) for LIC’s Jeevan
Lakshya is 512N297V01. This
number has to be quoted in all relevant documents furnished to the Policyholders
and other users (public, distribution channels, etc).
LIC’s
Jeevan Lakshya is a limited premium paying conventional With-Profits
Endowment Assurance plan. This plan provides
for Annual Income benefit that may help to fulfill the needs of the family,
primarily for the benefit of children, in case of unfortunate death of
Policyholder any time before maturity and a lump sum amount at the time of
maturity independant of survival of the Policyholder. The benefits and other details of the plan are given below.
2. BENEFITS:
The benefits payable under an inforce policy are as under:
a) Benefits payable on death:
Death Benefit,
defined as sum of “Sum Assured on
Death”, vested Simple Reversionary Bonuses and Final Additional Bonus, if
any, shall be payable at various durations as mentioned below:
Where
“Sum Assured on Death” is defined as
the sum of:
-
Annual
Income Benefit equal to 10% of the Basic Sum Assured, which shall be payable
from the policy anniversary coinciding with or following the date of death of
Life Assured, till the policy anniversary prior to the date of maturity.
-
Assured
Absolute Amount equal to 110% of Basic Sum Assured, which shall be payable on due date of maturity; and
The
vested Simple Reversionary Bonuses and Final Additional Bonus, if any, included
in the Death Benefit, shall be payable on
due date of maturity.
The
Death Benefit defined above shall not be less than 105% of all the premiums
paid as on date of death.
The
premiums mentioned above exclude taxes (including service tax), extra premium and rider
premium(s), if any.
b) Benefits payable on maturity:
On survival
to the end of the policy term provided all due premiums have been paid, “Sum Assured on Maturity” along with
vested Simple Reversionary bonuses and Final Additional bonus, if any, shall be
payable. Where Sum Assured on Maturity
is equal to Basic Sum Assured.
c)
Participation in Profits:
The policy shall
participate in profits of the Corporation and shall be entitled to receive
Simple Reversionary Bonuses declared as per the experience of the Corporation,
provided the policy is in full force.
vinay mohanty
3. ELIGIBILITY
CONDITIONS AND RESTRICTIONS:
For Basic Plan:
1)
Minimum Age at entry for
Life Assured : 18 years (last
birthday)
2)
Maximum Age at entry for
Life Assured : 50 years (nearer
birthday)
3)
Maximum
Maturity Age : 65
years (nearer birthday)
4)
Policy
Term : 13 to 25 years
5)
Premium
paying Term : (Policy Term - 3) years
6)
Minimum
Basic Sum Assured : Rs. 1,00,000/-
7)
Maximum
Basic Sum Assured : No Limit
The Basic Sum Assured shall be in
multiples of Rs. 10,000/- only.
Age at entry for the Policyholder
is to be taken as age nearer birthday except for the minimum age at entry i.e. 18
years.
For LIC’s Accidental Death and
Disability Benefit Rider:
1)
Minimum
Entry Age :
18 years (last birthday)
2)
Maximum
Entry Age :
The cover can be opted for at inception or at any policy anniversary thereafter
provided the minimum premium paying term left under the Basic plan is 5 years.
3)
Maximum
cover ceasing Age : 65
years (nearer birthday)
4)
Minimum
Accident Benefit Sum Assured : Rs. 10,000/-
5)
Maximum
Accident Benefit Sum Assured: An amount equal to the Basic Sum Assured subject
to the maximum of Rs.100 lakh overall limit taking all existing policies of the
Life Assured under individual as well as group policies including policies with
inbuilt accident benefit taken with Life Insurance Corporation of India and the
Accident Benefit Sum Assured under the new proposal into consideration.
The Accident Benefit Sum Assured shall be
in multiples of Rs. 10,000/-only.
For LIC’s New Term Assurance
Rider:
1)
Minimum
Entry Age : 18 years (last
birthday)
2)
Maximum
Entry Age : 50 years (nearest birthday)
3)
Policy
Term : Same
as Basic Plan
4)
Premium
Paying Term : Same as Basic
Plan
5)
Minimum
Term Assurance Rider Sum Assured : Rs.
100,000/-
6)
Maximum
Term Assurance Rider Sum Assured: The maximum Term Rider Sum Assured shall be
less than or equal to the Basic Sum Assured under the basic plan, but not exceeding the overall limit of Rs. 25 lakhs taking all
Term Assurance Riders Sum Assured under all existing policies of the life
assured including the new proposal under consideration.
The Term Assurance Rider Sum Assured can
be taken in multiples of Rs. 10,000/- only.
4.
MODE OF PREMIUM PAYMENT:
The modes of premium payment allowable are Yearly, Half Yearly,
Quarterly, and Monthly (ECS only or through salary deductions).
PAID AGENCY SYSTEM NEW INITIATIVE FROM IRDA
CLIA is almost scrapped through
Insurance amendment Ordinance 2014, IRDA has introduced a new channel of Distribution called Insurance
Marketing Firms(IMF) w.e.f 28-02-2015. Any Individual who is Graduate
with Insurance experience of five years can apply for a License of IMF. Many
retired LICians can start these firms. The IMF will recruit Insurance Sales Person who is
a rolled employee of the firm and the Insurance Companies need to pay the
remuneration of ISP(insurance sales persion) which is not less than Rs 5000 per month. In effect it’s called
paid agent(CPA).
Capital Requirements//
The individual taking IMF
need to establish himself that he had Net worth of Rs 10,00,000/-. A chartered
accountant certificate to this effect is only required.
Multiple tie ups with
Insurance Companies//
Registration of Insurance
Marketing Firm by engaging ISP for the purpose of soliciting and procuring
Insurance Products of two Life, two General and two Health Insurance companies
at any point of time, under intimation to the Authority.
The requirements for
becoming ISP//
1. 12th pass
2. Passing the specific
test for ISP (50 hours training)
Remuneration to IMF//
The remuneration payable
to Insurance Marketing Firm by the Insurer, for the solicitation of policies by
the ISPs shall be as specified by the Authority, from time to time, under Secs.
40(1) and 40(2) of the Act, as amended from time to time
Every ISP employed by the
Insurance Marketing Firm shall be paid a fixed monthly salary, which is not
lower than Rs. 5,000 per month or such other sum as may be specified by the
Authority from time to time.
In addition, the
Insurance Marketing Firm may receive fees or charges from life insurance
companies only in the form of service charges for recruitment, training and
mentoring of their ISPs.
These fees or charges shall not exceed 50% of first year commission and 10% of
renewal commission received by IMF.
No such payment shall be
made in case of general/health insurance business.
The life insurance
companies shall have to disclose to the Authority upfront at the time of filing
their products under file & use guidelines on payment of such fees or
charges to the Insurance Marketing Firm.
Job Security for ISP//
Ø The Insurance marketing
Firm under no circumstances can dismiss the ISP from employment during the
period of the registration i.e. for 3 years, except as allowed under Reg. 27
(2) (b). So no cost norms or MBG.
Ø There is no age bar
specified in the regulations regarding Insurance Sales Person.
Ø There is no recruitment
bar of ISP specified in the Regulations.
GOIB for ISP//
In addition to the
minimum amount specified above, the Insurance Marketing Firm, depending upon
ISPs performance can pay him additional incentives, which are declared upfront
and form part of the employment agreement between him and the Insurance Marketing
Firm.
Indemnity Insurance// The
IMF and its ISP need to take compulsorily Loss reducing Indemnity Insurance for
10 lakhs where in there is any dispute with customer and found that there was
misconduct or fraud, the Indemnity insurance will take care of the losses. So
no fear of writing MHR
Agents can become ISP// Existing
agents can surrender there license and Join IMF as ISP. For an ISP to become an
Insurance agent NOC from IMF is required.
Already there is
reluctance from people to join as agents since there is no fixed salary, here
they can get fixed salary + Incentives, Job security, No MAB and can sell LIFE,
General and Health insurance of 2 companies each. Private companies will
definitely promote these kinds of marketing firms and there will be lot of mis
selling in the Market and the biggest surprise is for conducting Inspection in
IMF by IRDA ten days prior notice to be given. Acche din ayegga?
There may be omission and
Correction in this article, please suggest any modifications required
see the
Gazette Notification of the IMF regulations in IRDA website
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