Those applying for life insurance policies may have to disclose not only their health and family details, but also state what they expect out of the policy.
To prevent cases of agents pushing policies carrying higher sales commissions to uninformed buyers and themselves filling policy details, the Insurance Regulatory and Development Authority (Irda) wants buyers to provide details of what they expect as death maturity benefit, pension benefit or investment returns.
Irda is looking at prescribing a standard proposal form for individual policies for all life insurance companies with a section on ‘needs analysis’. The new regulations planned will require insurers to have in place “a process and system to assess the ‘needs analysis’ carried out for each and every proposal received and the soundness of a recommendation about a particular product.” According to the new draft guidelines, an agent or a broker has to make a declaration that the product he has recommended is suitable for the buyer based on the information submitted by the latter.
The buyer too has to provide an acknowledgement that the agent or broker explained the features of the policy and that it suits his/her needs.
“Asking for these details from educated people or those buying high premium policies would justify the efforts. But most life insurance policy premiums are in the range of Rs 1,000-3,000 with sum insured of Rs 10,000 or so. Players like LIC sell a huge number of such policies in the rural region. It would be logistically very difficult to fill and provide all these details. We have requested the regulator to set a bar of Rs 50,000 annual premium for providing such details,” S B Mathur, secretary general, Life Insurance Council of India, told Financial Chronicle.
The Insurance Regulatory and Development Authority (Irda) has sought feedback on the draft regulations by May 15. The draft is based on a June 2010 discussion paper.
[Source - mydigitalfc]
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