Insurance regulator IRDAI has given a big relief to the policyholders and made a big change in the rules of life insurance. Now the customer will get more refund if the policy is closed before maturity.
For this, the rules of special surrender value have come into effect from October 1. This will benefit the most to those people who return the policy within a year. Now their entire money will not be lost. At the same time, the policy sold in the wrong way can also be returned easily. The amount that the company returns on closing the insurance before maturity is called surrender value. It is decided on the basis of the total premium paid.
Rules for these policies
The new rule will be applicable only on endowment policies of life insurance. Endowment policy means a policy which has an element of savings along with insurance. With the implementation of the new rule, the margin of insurance companies in endowment policies will decrease. The new rule will not be applicable on ULIP and term insurance policies.
Premium required for one year
Earlier, if a policyholder used to close a life insurance policy after one year, then all the money paid as premium would be lost. With the new special surrender value rules, the policyholder will be entitled to get a refund even after returning the policy after the first year. However, for this, the policyholder will have to pay the premium for at least one year, only then he will be able to take advantage of this rule.
Surrender Period Sum Assured+Bonus Surrender Value Percentage of Premium
1 year 60,000 31,295 62.59%
2 years 1,20,000 67,284 67.28%
3 years 1,80,000 1,08,495 72.33%
4 years 2,40,000 1,55,510 77.76%
5 years 3,00,000 2,08,967 83.59%
7 years 4,20,000 3,38,083 96.60%
9 years 5,40,000 5,02,235 111.7%
(Note:(This calculation is based on a 10-year policy with an annual premium of Rs 50,000 and a bonus of Rs 10,000 on a sum assured of Rs 5 lakh. These are subject to change.)
Earlier this much money was returned
According to the old rules, there was no provision for refund of the premium amount paid on surrendering the policy after one year. On returning the policy after two years, 30% of the total premium paid was refunded. On returning the policy after three years, 35% was refunded, on returning the policy between four to seven years, 50% was refunded and on returning the policy two years before the maturity of the policy, 90% was refunded.
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