No Cap On Rider Premium Under Group Risk Policy

The Insurance Regulatory and Development Authority (Irda) has clarified that there will be no ceiling on the premium paid for riders by an individual covered under a group insurance scheme.

For a man on the street this means that he is better off purchasing a term or life insurance policy as an employee of his firm, provided the company has a group insurance policy.

Otherwise, as an individual if he opts to buy the cheapest term assurance cover, he cannot avail of additional covers as the Irda has stated that the premium paid for the additional riders cannot exceed 30 per cent of the premium paid for the base policy.

Irda has stated in the Protection of Policyholders' Interests Regulations, 2002, that "...in no case, the premium relatable to all the riders put together shall exceed 30 per cent of the premium of the main product".

New players introduced risk covers with riders whereby the number of combinations of products could be as many as 250 with just eight basic plans and nine riders. This has since August 1 come to a standstill as the number of riders an individual can purchase is restricted by the size of the base policy, sum assured, and the age of the policyholder.

Most new players have introduced the four basic products, and then left it to the policyholder to choose what kind of additional cover he would like. Prior to liberalisation of the insurance market, riders were non-existent.

The emergence of new players has seen changes in the products sold, with the move more towards need-based selling techniques, which are brought about with the introduction of riders.

Most players offer riders -- covering benefits such as accidental death, critical illness, term, waiver of premium, total and permanent disability, paid-up additions, guaranteed insurability and spouse's insurance -- with the base plans.