Business News Desk – The new guideline related to surrender of insurance policy is going to come into effect from October 1, 2024. It is estimated that this may increase insurance premiums or reduce the commission of insurance agents. Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) had introduced revised guidelines regarding ‘surrender value’ to provide better returns to policyholders who exit life insurance policies early.
‘Surrender value’ in insurance refers to the amount that is paid by the insurance company to the policyholder if he surrenders the policy before its maturity date. If the policyholder decides to withdraw the policy while it is still in force, he will be given a share of the income and savings. The regulator has stressed the need for insurance companies to ensure ‘fairness and value’ to both policyholders who exit the policy and those who continue the policy while deciding the amount to be refunded during ‘surrender’.
There will be an increase in the premium amount
A senior official of a private sector insurance company said that to compensate for the revised ‘surrender’ charges, life insurance companies will either increase the premium amount or cut the commission of their agents. Gaurav Dixit, director, CareAge Ratings, said significant changes may be seen in insurance products and commission structures. Due to this, there may be fluctuations in premium in the second half of the current financial year.
Most of the insurance companies have made preparations to make changes in their policies to meet these provisions. Most of these companies have a limited number of policies compared to life insurance giant LIC. At the same time, LIC has to do a big job of making changes in its policy to meet the instructions of the regulator.
