- By Aditya Jha
- Tue, 01 Oct 2024 07:34 PM (IST)
- Source:JND
The new life insurance policy rules, which were implemented from October 1, brought good news for policyholders. According to the new special surrender value norm, a policyholder will get higher returns if they exit their life premium policy during the initial years. This is expected to provide ease and flexibility to the life insurance customers who want to switch policies. The customers will get the surrender amount even if they have paid only one annual premium.
A surrender value in insurance is the amount paid by the insurers to a policyholder if he or she terminates the policy before its maturity date. Earlier, this facility was available for the customers from the second year onwards.
What will be the benefits of the new policies?
As per the new policies, the customers would be able to switch policies easily, would receive more refunds, and would have the access to surrender the policy with returns. In spite of this, the policyholders will receive less financial loss if they are forced to surrender their policies. The new policies aim to protect policyholders from unfair practices of the market. Apart from this, the norms claimed that the discount rate for the paid-up value will be allowed up to 50 basis points. The margins in the non-participating, guaranteed-return category of endowment plans will be most affected for the insures. However, there will be no change in the surrender value of unit-linked insurance policies.
What will be the impact on life insurance companies?
Life insurance companies had to revise their products and services to cope with the new rules and regulations. Apart from this, the IRDAI maintained the original deadline even though the companies demanded a three-month extension. The internal rate of return for customers might get affected due to changes in interest rates and surrender value calculations.
