IRDAI unveils `Standard Individual Immediate Annuity Product'', to be mandatorily offered by life insurers from Apr 1

The entry age for a customer to buy an annuity product is 40 years and maximum age is 80 years.The minium annuity amount under the proposed  policy will be Rs. 1000 per month, Rs. 3000 per quarter, Rs. 6000 per half year and Rs. 12000 per annum. Though pricing is left to the insurers, annuity rates should be derived based on actuarial principles and ensure that such annuity rates are fair and reasonable to customers. Soon customers, needing pension products, could get an opportunity to buy guaranteed return products from the National Pension System (NPS) for building their retirement corpus. So far, the NPS has remained a market-linked pension scheme.

 

Hydearbad:

With a view to having uniformity on annuity products across life insurers, the insurance regulator IRDAI,on Monday,  has asked all of them mandatorily offer a ``Standard Individual Immediate Annuity Product'' with effect from 1st April, The product shoud be filed by the insurers latest by 28th February, said the IRDAI.

The entry age for a customer to buy an annuity product is 40 years and the maximum age is 80 years, said the IRDAI.. 

The standard individual immediate annuity product should be be called, “Saral Pension”, prefixed by the insurer’s name, said the IRDAI..

The new product will offer life annuity with 100% Return of Purchase Price; and Joint Life annuity with a provision of 100% annuity to the secondary annuitant on death of the primary annuitant and Return of 100% Purchase Price on death of last survivor.

All types of lives including male, female and transgender can be covered under the new annuity policy.

The minium annuity amount under the proposed  policy will be Rs.1000 per month, Rs. 3000 per quarter, Rs. 6000 per half year and Rs. 12000 per annum..

Thete is no limit on maximum annuity and pricing is left to the insurers.

However, annuity rates should be derived based on actuarial principles and ensure that such annuity rates are fair and reasonable to customers.

The policy can be surrendered any time after six months from the date of commencement,

Mode of annuity payment should be Monthly, Quarterly, Half-Yearly and Yearly.

Payments shall be in arrears only, which means that the first annuity payment will start after the modal duration; for example after three months in case of quarterly mode.

Loan can be availed any time after six months from the date of commencement of the policy.  Maximum amount of loan that can be granted under the policy shall be such that the effective annual interest amount payable on loan does not exceed 50% of the annual annuity amount payable under the policy.

Soon customers, needing pension products, could get an opportunity to buy guaranteed return products from the National Pension System (NPS) for building their retirement corpus. So far, the NPS has remained a market-linked pension scheme.

But Pension Fund Regulatory Authority of India (PFRDA) chairman Supratim Bandyopadhyay has earlier said that an assured returns plan was in the works and will be formulated soon..

“(Offering such a product) is part of our Act and we will definitely do it. We are forming a committee and obtaining actuarial inputs to formulate such a product in the next six months. We will then seek a board approval and prepare for the launch,” he had said.

The roll-out could take longer.Such a product, however, will come with a separate guarantee charge.

“The capital adequacy requirements for such a product will go up. Not only that, there will be a different charge structure too. Wherever there are guaranteed products, there is a guarantee charge,” Bandyopadhyay had explained.

The IRDAI has said it is felt necessary to introduce a standard, individual immediate annuity product, with simple features and standard terms and conditions.  Such a standard product will make it easier for the customers to make an informed choice, enhance the trust between the Insurers and the insured, and reduce mis-selling as well as potential disputes.


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