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New rules related to surrender of insurance policy are going to be implemented from Tuesday. These rules have been issued by the Insurance Regulatory and Development Authority of India (IRDA), which aims to provide better returns to the policyholders. However, these changes may lead to an increase in insurance premiums or a reduction in the commission of agents, which will bring new changes in the insurance industry.
New rules apply
From Tuesday, new rules will be implemented for returning insurance policies. These rules are meant to give better returns to policyholders. However, this may increase the insurance premium or reduce the commission of insurance agents.
What is a surrender value?
Surrender value is the amount that policyholders receive when they return their policy before maturity. When a policyholder returns the policy, he receives a share of the income and savings. This amount is at the time when the policyholder has decided to return it.
Regulatory Guidelines
The Insurance Regulatory and Development Authority of India (IRDA) has given instructions to the companies. Companies have to ensure that the amount given at the time of surrender is fair. This means that this amount should be right for both the person returning the policy and the person continuing the policy.
Response from companies
An official of a private insurance company said that to compensate for the new surrender charges, insurance companies can increase the premium. Or they can cut the commission of their agents.
Change in premium
Gaurav Dixit, director of CareAge Ratings, said that this change will lead to major changes in insurance products and commission structure. This may lead to fluctuations in premiums in the second half of this financial year.
Preparing the companies
Most insurance companies have prepared to change their policies to implement the new rules. These changes will be easy for small companies. But big companies like LIC will have to work harder. They will have to make many changes to their products.
Impact on policyholders
The new rules will have a big impact on policyholders. They may now see a change in the amount they will get on returning the policy. This will make it important for them to understand whether they should continue with their policy or return it.
It is worth noting that these new provisions will bring a significant change in the insurance sector. Policyholders will have to be aware of this change. They will have to make their decisions thoughtfully. In such a situation, better communication between insurance companies and policyholders will be necessary.
