Seven ways how Life Insurance Policies set to change

NPnews24 Online: Life insurance products are undergoing some major changes, and mostly going to benefit policyholders. Here are some of the seven important products in the list.

1) Higher withdrawal allowed in pension plans: Maximum withdrawal allowed at maturity under pension plans has been increased from one third to 60 percent. 60 per cent withdrawal is allowed now but only one third is tax-free. Rules have also been tweaked for premature part withdrawals. But this being allowed only fund need in case of- higher education, children’s wedding, purchase or construction of house, treatment of critical illness of self or spouse

2) Freedom to take risks, invest in equities: Change likely to make of the maximum impact pertains to unitlinked pension segment. Policyholders can decide whether they want assured benefit or not. Those in the younger age brackets can stomach risks and afford to stay invested over the long-term can choose to deploy funds in equity.

3) Greater choice when buying annuities: Annuity purchase conditions liberalized. Currently, a policyholder has no choice but to purchase annuities at maturity, from the insurer who has issued the policy.

4) Shorter period to acquire surrender value: New rule have raised this to 35 per cent. You will get 30 percent of the amount. In case of policies with tenures greater than seven years, despite the rise in guaranteed surrender value, existing traditional non-linked products remains an expensive and tedious affair.

5) Flexibility to reduce premium: The regulation provide policyholders the flexibility to reduce their premium after the fifth policy year. Now you can premiums by 50 per cent and still keep the policy in force.

6) Lower life cover in Ulips: On the Ulip front, the minimum cover offered will come down from 10 times the annual premium to seven times. Higher proportion of premiums will be directed towards investments.

7) Extended revival period: Policyholders wanting to revive their Ulips will now get three years instead of two. For non-linked plans, It has gone up to five years.