The Life Insurance Corporation of India (LIC), the country’s largest life insurer, has revised its traditional participating life insurance plans, including premium rates and terms. Premium rates have been increased by 4-9% on various plans, including Jeevan Anand, Jeevan Labh, and Jeevan Lakshya, with the highest increase for older age brackets. The minimum sum assured or life cover has been raised to Rs 2 lakh from Rs 1 lakh. The revised plans offer lower Internal Rate of Return (IRR). To comply with IRDAI regulations, LIC has also reduced commissions for its agents to 28% from 35% and introduced a “ClawBack Clause” to recover commissions if a policy lapses or is surrendered within a specified period. The IRDAI has also introduced new surrender value norms, requiring insurers to pay a special surrender value after policyholders complete the first year’s premium payment. This is a shift from earlier regulations that provided no surrender value in the first year. The new norms also reduce surrender charges on traditional savings plans and require insurers to ensure “reasonableness and value for money” for both existing and continuing policyholders.
