Transparent Unit Linked Insurance Policies
Confused over buying the right unit-linked policy?
Well you are not the only one. It is really confusing when you have to compare the offerings of the 22-odd life insurance companies in the market.
While insurers pitch unit-linked policies as the hottest and most transparent plans, most policyholders grapple to get acquainted to terminology of plans from different insurance companies.
So much so, the Life Insurance Council has taken up the issue with the Insurance Regulatory and Development Authority (Irda).
“We are looking at standardisation of nomenclature used by insurance companies and also a uniform method of calculating charges by companies,” S B Mathur, ex-LIC chairman and secretary general, Life Insurance Council, told DNA Money.
“Customers get confused to see charges in plans being called by different names. For example, some use the term ‘fund management’ charge, some call it net asset value (NAV) charge, while some others brand it as ‘policy maintenance charge’ or policy administrative charge.
This creates confusion for customers as they compare similar products,” Mathur said. “We are saying, if the charge is for management of funds it should be called fund management charge. The method of calculation should also be standardised. Some calculate these charges on the basis of sum assured, while some on the NAV,” he added.
The council has said that there should be one or two methods so that it makes it easier for the customer to compare the loads.
While the regulator is still to take a decision on these, Irda actuary R Kannan said, “There is a need to enhance transparency in the operation of insurance companies so that policyholders make informed decisions.
Moreover, to consolidate the benefits, we must inculcate and enhance the confidence of both current and prospective policyholders.”
The Life Insurance Council is also working on a host of other issues. “We are dealing with taxation and compliance issues including KYC norms,” Mathur said.
srinivasu Said,
April 25, 2009 @ 1:04 pm
dear all.
thanks very much for this service.a very good move to educate very rich and very innocent customers who in india never know what good questions to ask life insurance agent or socalled WEALTH/RELATIONSHIP MANAGERS.irda has done nothing sir!nothing sofar.very few people can read a policy benefit illustration before signing any ulips.