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Life Insurance Companies offer policies for Fixed Policy Term

New Delhi: December 14,2012

Insurance Regulatory and Development Authority (IRDA) has informed that Life Insurance Companies offer policies for fixed policy term.

 

            As per IRDA, the policy term that is offered by life insurance companies may range from 5 years onwards, in case of ULIPs and differ from one product to another. In case of traditional life insurance policy contracts the minimum policy term may also vary from product to product. Data on number of policies lapsed in respect of non linked business is furnished hereunder. The Premium amount involved in lapsed policies is being compiled by IRDA.

 

Year

2011-12

2010-11

2009-10

Insurer

No of policies forfeited / lapsed

(000)

No of policies forfeited / lapsed

(000)

No of policies forfeited / lapsed

(000)

LIC of India

12512.52

11483.44

9744.37

Private Insurers

3539.43

2567.92

2608.57

 

           

 As per IRDA, according to section 113 of Insurance Act, 1938 life insurers are required to pay surrender value to a policyholder who has paid premiums for at least three years. However, insurers may choose to provide surrender value before three years also.

 

            The IRDA has notified IRDA (Treatment discontinued linked insurance products) Regulations, 2010. As per the said regulations, the fund existing on the date of lapse will be transferred to the discontinued fund. Such fund accumulated at the savings interest rate less the discontinuance charge is available to the policyholder at the end of five years. The Authority has also proposed the regulations on the non linked products, in which a minimum surrender value is proposed to ensure the policyholder interests are protected.

 

          This was stated by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to a question in the Lok Sabha today.

 

 

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PIB Release/DL/1254

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