Get discount of 2.7% by paying Life Insurance Premium in advance

New Delhi : The Insurance Regulatory and Development Authority of India (IRDAI) has issued draft guidelines to the life insurance companies proposing to allow these companies to offer discounts for renewal premium collected in advance. “It has been decided to permit life insurers to offer discounts on renewal premiums paid in advance subject to conditions,” the draft norms said.

As per these draft guidelines, exemption on deposit of advance premium should be equal to the rate of interest on savings bank account of State Bank of India (SBI) by April 1 in every financial year. Apart from this, insurance companies will have to give an additional 100 basis points concession on it.

This facility should be applicable to the payment of all advance premiums throughout the financial year. SBI currently pays 2.7 percent interest to the customer on its savings bank account.

It has been said in the guidelines that the rebate facility will be given to all existing and prospective policy holders who wish to pay the advance premium on the existing available schemes.

IRDAI has asked the insurance companies to inform the policy holders within 7 days of giving such facility. The insurance companies said that their responses were sought on the subject and the regulator may soon issue final guidelines.

The insurance regulator has also stated that between the period of receipt of advance premium and the next date of premium payment till the date of settlement of claim in case of any accident with the policy holder, the advance premium and the interest accrued thereon will have to be returned to the policy holder or beneficiary along with other terms and conditions.