Irdai introduces changes to life insurance policy surrender value; know what you will get now
Scores of insurers in India are likely to get relief after IRDAI changes its rules on the surrender value of insurance policies. Under the revised rules, the surrender value will be decided by the policy surrender period. That means, the longer the policy surrender period, the higher the surrender value. For the single-premium policy, if the policy is surrendered in the third year, the insurer will get 75 per cent of the total premium paid; if the policy is surrendered in the fourth year, the insurer will get 90 per cent of the total premium paid.
In an attempt that may give huge relief to crores of insurance in India, Irdai ordered that the surrender value of a insurance policy will be determined by its surrender period. With that change, the longer the policy surrender period, the higher the surrender value. Know what will be the surrender value for non-single, single premiums and life insurance.
Surrender value (non-single premium)
If the policy is surrendered in the second year, the insurer will get 30 per cent amount of the total premium paid.
If the policy is surrendered in the third year, the insurer will get 35 per cent of the total premium paid.
If the policy is surrendered in the fourth to seventh year, the insurer will get 50 per cent of the total premium paid.
If the policy is surrendered before 2 years of maturity, the insurer will get 90 per cent of the total premium paid.
Surrender value (single premium)
If the policy is surrendered in the third year, the insurer will get 75 per cent of the total premium paid.
If the policy is surrendered in the fourth year, the insurer will get 90 per cent of the total premium paid.
If the policy is surrendered before 2 years of maturity, the insurer will receive 90 per cent of the total premium paid.
Are new changes effective for life insurers?
There is no significant change in the new surrender value for policies up to three years.
Most policies are surrendered after three years.
There is a slight increase in the surrender value between fourth and seventh year.
Most policies are not surrendered after the seventh year.
What are Irdai's other changes?
Irdai has approved eight principle-based regulations.
This amendment will be important for regulatory governance.
As many as 34 regulations were changed with a total of six regulations.
Along with this, two new regulations were also brought.
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