Term insurance plans to get cheaper
n a move aimed at making term insurance products cheaper and popular among customers, the Insurance Regulatory Development Authority of India (IRDA) has decided to reduce the solvency margin on these products under traditional business.
Term insurance policies provide pure life cover with no maturity or survival benefits. Since there are no maturity benefits in these policies, they are not as popular as, say, the money back covers.
Currently, insurers have to maintain a solvency margin of 150 per cent on insurance products. The move will ease the capital requirement by one third for term policies for both individual and group policies. Solvency margin requirements are the prudential norms on capital requirement for insurance companies. They are the equivalent of capital adequacy ratios for the banking industry. Insurers are likely to pass on the benefit to customers.
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