In 2021-22, over 2.30 crore life insurance coverage insurance policies have been surrendered by policyholders a lot earlier than their maturity. This is greater than 3 times the variety of prematurely surrendered insurance policies (69.78 lakh) in 2020-21.
A nationwide lockdown introduced by the federal government on March 24, 2020, following the outbreak of COVID-19, had thrown many individuals out of jobs throughout the nation, leading to lack of livelihood and wage cuts. The pandemic additionally elevated bills as a result of medical emergencies. To mitigate the disaster, the federal government introduced a slew of measures together with a moratorium on loans and partial withdrawal from EPF stability. But even in 2021-22 because the pandemic continued, many individuals began prematurely promoting their life insurance coverage insurance policies to get some cash.
16 out of 24 insurers noticed a rise in untimely sale of insurance policies by policyholders as in comparison with the earlier yr, in accordance with an evaluation of quarterly disclosures made by insurance coverage firms.
State-owned life insurance coverage companies noticed a pointy soar within the variety of insurance policies surrendered in 2021-22 as in comparison with the earlier yr. LIC has a market share of round 64 per cent within the life insurance coverage enterprise.
Max Life Insurance, ICICI Prudential, HDFC Life, Bajaj Allianz, Aditya Birla Sunlife, Kotak Mahindra, Tata AIA, Exide Life Insurance, Canara-HSBC, Shriram Life Insurance, Future Generali India, Ageas Federal Life Insurance, Edelweiss Tokio Life Insurance, Aviva Life Insurance and Bharti AXA are the opposite 15 insurers that noticed a rise within the variety of untimely gross sales of insurance policies through the yr.
The give up worth of the coverage of the policyholders signifies misery. The common give up worth paid to policyholders was Rs 62,552, which is lower than half of the typical give up worth of Rs 1,67,427 paid to prospects in 2020-21. For LIC policyholders, the typical surrender-value of over 2.12 crore insurance policies surrendered throughout 2021-22 was simply Rs 43,306, whereas. In the final yr, LIC policyholders had surrendered 53.35 lakh insurance policies and the typical give up worth paid to them was Rs 1,49,997.
Only eight firms have seen a lower within the variety of insurance policies surrendered in 2021-22 as in comparison with the earlier yr. These are: SBI Life, Reliance Nippon, IndiaFirst Life Insurance, PNB MetLife, Pramerica, Star Union Dai-ichi, Aegon Life Insurance and Sahara India. Policyholders of those firms have surrendered 4.93 lakh insurance policies in 2021-22, which is 21.7 per cent lower than in 2020-21.
The firms which have seen a pointy improve within the variety of insurance policies surrendered as in comparison with the earlier yr are: LIC (298.3 per cent); HDFC Life (149 per cent); Edelweiss Tokyo (117.4 %); Canara HSBC (66.4 %); Future Generali (49.4 per cent); Tata AIA (43.45 per cent); and Shriram (27.4 %), MaxLife (16.2 %) and so on.
When a policyholder surrenders his coverage earlier than maturity, he receives solely a small proportion of the premiums deposited. But totally different firms have totally different guidelines for this. As per LIC coverage, the give up worth is payable solely after three full years of premiums. LIC doesn’t want to touch upon the difficulty.
Insurers usually advise policyholders to not prematurely give up insurance policies as their worth is diluted.
The Guaranteed Surrender Value quantity is normally talked about within the coverage paperwork. If the premium is paid for 3 consecutive years, the policyholder is eligible to obtain the give up worth as per the coverage specs.
With inputs from TheIndianEXPRESS
