As per a most recent Irda notification, insurers can now gather premium for a highest 3 months in advance for the 2 linked and non-linked plans. Nevertheless, the premiums collected in advance can only be adjusted on the due date and commission to agents paid following that.
The Insurance coverage Regulatory and Development Authority (Irda) has mentioned that advance assortment will be permitted only for the premium due in the identical financial year. Nevertheless, in instances where the premium due for the following monetary yr is becoming collected in the present fiscal, the insurer can acquire the premium for a maximum time period of 3 months in advance of the due date.
Also, the premium collected in advance will have to be adjusted on the due date and not from the date of clearing of the cheque. The commission to the agent will have to be paid soon after adjustment of premium on the due date only.
In February final year, the regulator’;s gazette notification for both linked and non-linked insurance coverage policies had underlined that advance premium collection will be accepted only thirty days just before the due date.
For the month-to-month premium payment mode, the insurer can accept 3 months’; premiums in advance only
on the date of commencement of the policy, if it is a month to month mode of payment and is permitted under Irda’s file-and-use method.
Similarly, for unit-linked insurance policies, the gazette notification had mandated that units be allotted on the day the proposal is accepted and the premium funds adjusted. Also, the premium will have to be adjusted on the due date even if it has been obtained in advance and the status of the premium acquired will have to be communicated to the policyholder.
Insurers, particularly, in non-existence category, try to gather the premium in advance by giving discount rates. This ensures that the policyholder does not switch to one more insurer. Analysts, nevertheless, say Irda’s move for 30-day advance payment was done to stop mis-promoting as agents typically entice policyholders with special discounts. State-owned Life Insurance Corporation had, at 1 stage of time, allowed premium payments 5 many years in advance for its standard