One of the biggest challenges that investors in insurance policies face is the lack of liquidity. Though they are allowed to surrender their policy at any time, the charges to do so are so high that most prefer to remain locked into it. Such situations are not uncommon because a lot of policies are pushed to young people by their elders, or, mis-sold with the promise of higher market-linked or guaranteed returns.
So, when the Insurance Regulatory and Development Authority of India (Irdai) issued a proposal in December 2023, reducing surrender charges—which meant an increase in the surrender value (SV)—the move was welcomed and considered a step in the right direction. Irdai proposed a guaranteed surrender value (GSV) and asked insurers to refund premiums exceeding a certain threshold to policyholders.
But the hopes of receiving a higher SV were dashed when Irdai seemingly gave in to industry pressure and came up with the final surrender norms in March 2023, which are broadly in line with the existing ones.
Since nothing has really changed now and Irdai’s final move is not to the advantage of policyholders, the onus is once again on investors themselves to do their due diligence in the face of mis-selling and understand complex policies on their own.
But Mahavir Chopra, founder, Beshak.org, an insurance platform, doesn’t think that increasing the SV is a solution to mis-selling. “It will be like treating the symptom, not the disease. If the focus is to encourage need-based purchase of insurance and reduce mis-selling, increasing SV won’t solve the problem. In fact, it can be used to mis-sell further. A higher SV will also reduce returns for serious customers. The real solution is to enforce clear communication of benefits and limitations in a plan with customers before they buy, and to enforce persistency-linked commission and revenue structures.”
Bu hikaye Outlook Money dergisinin May 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Outlook Money dergisinin May 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Giriş Yap
Save As Per The Corpus You Need
I am 29. I started investing in mutual funds (MFS) two years ago. I invest ₹2,000 each in three equity funds-multicap, focused equity and multi asset allocation-every month.
Short Selling
The capital markets regulator, the Securities and Exchange Board of India (Sebi), recently issued a new circular which said that while placing orders, institutional investors will have to inform in advance whether the transaction is short selling or not. The order also said that retail investors would be allowed to make similar disclosures till the end of trading hours on the day of the transaction.
Mind Exclusions Before Buying Policy
I am a 29-year-old software engineer. I got married a year and a half ago and currently reside with my parents.
HOW AVERAGES CAN RUIN THE MATH
Calculating a retirement corpus on the basis of average returns can have disastrous consequences as different sequence of returns can lead to different outcomes
Calls For Urgent Action As India Braces For Dementia Crisis
As the ageing population grows, the threat of Alzheimer's disease has also spiked, drawing attention to whether India is prepared to provide the medical support it calls for.
5 TRICKY TRAVEL QUESTIONS, AND 1 FOOLPROOF TRAVEL PLAN
Now that you have finally bid goodbye to your worklife, you have all the available time at your disposal to satiate your travel bug. But before you set sail on your wanderlust, here are a few things you should keep in mind
THREE STOCKS MFs WENT BANANAS OVER
When you invest in mutual funds, you are indirectly investing in stocks. So, we decided to find out which are the stocks most mutual funds in the equitylinked savings scheme, flexi-cap, multi-cap and large-and-mid-cap categories invest in. We analysed 149 funds that have a broad mandate to invest in a wide array of stocks and came up with the three stocks that most mutual funds invest in
ANNUAL REPORT CARD
The Indian equity market is in an upbeat mood, and almost all the funds in the OLM 50 list are among the top five funds in their respective categories in terms of performance.
Don't Just Blindly Follow Maxims
The given investment maxims have proven relevant most of the time, but they are not carved in stone. Investment strategies should be tailored to individual situations
IS YOUR fund FARING WELL?
Outlook Money's India's Best Funds 2024 issue aims to empower you with valuable insights and analysis, to help you make informed decisions on the funds you already own or the ones you plan to invest in