Soon, get discount on life premium paid in advance
Life insurance policyholders will soon be able to receive a discount if they pay the policy premium in advance. Also, from April onwards, those buying a personal accident cover would have the option to take a standarised cover, named Saral Suraksha Bima, from all general and health insurers.
Acting on representations from the industry, the Insurance Regulatory and Development Authority of India (Irdai) has decided to permit life insurers to offer discounts on regular premiums paid in advance.
As per the draft guidelines issued by the regulator, the discount rate shall be equal to interest rates on savings bank accounts of State Bank of India as on April 1 of each financial year. Further, an addition of at least 100 bps shall be applicable for advance premiums received during the entire financial year.
"The industry has been undertaking several measures to ensure that renewal premiums are paid on time, as persistency is a key metric. By paying premiums in advance of three months or more, the policyholder can get a discount on premium that is higher than the interest rate on a savings account. While the customer will get a discount, we will have the renewal premiums already in the books. We will have to deploy our resources for reminding
only those people who have not made advance payment," said Atri Chakraborty, chief operating officer, IndiaFirst Life Insurance.
According to him, the discount will be calculated for the number of months the premium is paid ahead of the renewal date. Currently, around 10 to 12 per cent of the policyholders pay their renewal premiums ahead of the due date.
The regulator has, meanwhile, asked general and health insurers to offer a standard personal accident insurance product with common coverage and policy wordings across the industry from April 1, 2021. This product, Saral Suraksha Bima, will have the basic mandatory covers as specified in Irdai guidelines and will be uniform across the market.
The insurer can determine the price according to the covers offered. The policy tenure of the standard product shall be one year. This policy would also be offered as a group product. Minimum entry age will be 18 years and maximum age shall be at least 70.
The base cover will have to provide a death benefit up to 100 per cent of the sum insured to the policyholder if the death occurs due to injury in an accident, or the person dies within 12 months from the date of accident. The insured will also get 100 per cent of the sum insured for permanent total disablement and 50 per cent for permanent partial disablement.
Hospitalisation expenses arising due to accident shall be indemnified up to 10 per cent of base sum insured. On death or permanent total disability of the insured person, a one-time educational grant of 10 per cent of the base sum insured, per child, should be paid to all dependent children.