Should you wait till October to buy insurance?

Wait till products are re-filed, as it will give you added benefits

Don’t fall prey to the pitch note of insurance agents, caution financial planners. But, offlate your phone and mailbox must have seen messages sent by agents pushing you to buy life insurance as soon as possible.

 

One of those messages read, “Buy life insurance now because after October the product may not be as beneficial.” These are ticks used by agents to push products and make some good buck before October.

 

Reason: After the life products get re-filed, they are likely to offer lower commissions to the agents and higher surrender value to the customer. Hence, agents are painting a wrong picture and taking customers for a ride.

 

The Insurance Regulatory Development Authority (Irda) has asked all life and general insurers to re-file products in a way that business is protected and customers aren’t inconvenienced. The deadline for r-filing both life and health products is October 1 this year.

 

Re-filing is essential at this point in time, because many insurance products are more than a decade old, and do not comply with the new product design which should be in line with the needs of the customers.

 

In case of life insurance, lower commissions paid to the agent are definitely going to benefit the customer. For instance, if you have chosen a premium paying term of 10 and five years, the commissions charged will not exceed 30 and 10%, respectively, says A S Narayanan, chief distribution officer at Bajaj Allianz Life Insurance. Earlier these commissions paid were higher for some insurers.

 

In addition, re-filed life products will also uniformly have a sum assured that will be 10 times the premium paid. This, in turn, means a higher sum assured, which will meet the tax deduction requirements.

 

The same applies to health products too.

 

K G Krishnamoorthy Rao, managing director and CEO of Future Generali  India Insurance, “For instance, in health insurance, after the products are re-filed, these can be renewed for lifetime. Products will also give cumulative bonus and companies can no longer refuse to issue policies to senior citizens.”

 

In addition, the insurers will not be allowed to charge a loading on the premium. In simple words, the insurer will not charge extra to the policyholder, in case he has made a claim in a given year. Also, critical illnesses will now be clearly defined. All these will work in the benefit of the customers.

 

Hence, don’t fall for ploys laid down by the agents, and take a calculative decision.