What Is in Store?

Consumer Voice - - Bfsi -

In­sur­ance Reg­u­la­tory and De­vel­op­ment Author­ity (IRDA) is bring­ing out new guide­lines for ap­point­ment of in­sur­ance agents and cap­ping com­mis­sions to in­sur­ance agents, in­clud­ing re­duc­ing the rates of com­mis­sions dur­ing the first year of the pol­icy and for its re­newals from the sec­ond year on­wards. The salient fea­tures are: salary struc­ture, thereby en­sur­ing that they work on fixed monthly in­come. that in­sur­ance agents’ com­mis­sion on the first year’s pre­mium is much higher (some­times @ 25 per cent and above) and ta­pers off dur­ing each re­newal year. Now the re­vised pol­icy will bring them fur­ther down so as not to ex­ceed an ag­gre­gate of 10 per cent of all first-year pre­mi­ums and four per cent of all re­newal pre­mi­ums on poli­cies with de­ferred an­nu­ities. pay­ment on any up­front com­mis­sions by in­sur­ance com­pa­nies to dis­trib­u­tors like banks. IRDA also sug­gested can­celling the sys­tem of ad­vance pay­ments to in­sur­ance in­ter­me­di­aries. In­sur­ance com­pa­nies, which are sell­ing their prod­ucts through bank branches, will then need to come up with a dif­fer­ent model. The pro­posed IRDA guide­lines, if adopted into law, will en­able the com­mon man to get pre­mi­ums at a low cost since in­sur­ance com­pa­nies will not be spend­ing a huge sum of money on com­mis­sions. As an in­vestor, it is your re­spon­si­bil­ity to en­quire about all the de­tails of a prod­uct be­fore choos­ing it. If you have been per­suaded about an in­sur­ance plan by your friendly in­sur­ance agent, make sure that the agent has your ob­jec­tive as the para­mount fac­tor and noth­ing else.

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