NO less than 2.30 crore life insurance was paid by the policy holders in 2021-2022, ahead of their maturity. This is more than three times the number of points (69.78 lakh) that were awarded earlier in 2020-2021.
The national lockdown announced by the government on March 24, 2020, following the spread of Covid-19, forced many people to quit their jobs across the country, resulting in poor living conditions and reduced wages. The pandemic also led to an increase in the cost of medical care. In order to mitigate these problems, the government announced several measures including loan freeze and partial withdrawal from EPF banks. But as the pandemic continues even in 2021-22, many have started selling their insurance early to raise funds.
About 16 of the 24 insurers saw an increase in long-term policyholder sales compared to last year, a review of quarterly data released by insurance companies shows.
The state-owned behemoth Life Insurance Corporation has seen a significant increase in the policies issued in 2021-2022 compared to the previous year. LIC has a market share of about 64 percent in the life insurance business.
Max Life Insurance, ICICI Prudential, HDFC Life, Bajaj Allianz, Aditya Birla Sunlife, Kotak Mahindra, TATA AIA, Exide Life Insurance, Canara-HSBC, Shriram Life Insurance, Future Generali India, Ageas Federal Life Insurance, EdelWeiss Tokio Life Insurance, AA . Life Insurance and Bharti AXA, and 15 other insurance companies, which saw an increase in the number of early sales of policies during the year.
The price paid to the policyholders gives an indication of the stress. The average surrender value given to policyholders was Rs 62,552, less than half of the surrender value of Rs 1,67,427 that was given to subscribers in 2020-21. For LIC policyholders, the surrender value of over 2.12 crore paid in 2021-2022 was Rs 43,306 crore. In the last year, LIC policyholders surrendered 53.35 lakh policies and the premium paid was Rs 1,49,997.
Only eight companies saw a decrease in the points awarded in 2021-2022 compared to the previous year. These are: SBI Life, Reliance Nippon, IndiaFirst Life Insurance, PNB MetLife, Pramerica, Star Union Dai-Ichi, Aegon Life Insurance and Sahara India. Policyholders in these companies issued 4.93 lakh points in 2021-22, 21.7% less than 2020-2021.
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Among the companies that have seen a significant increase in the number of policies issued compared to the previous year are: LIC (298.3 percent); HDFC Life (149 percent); EdelWeiss Tokio (117.4 percent); Canara HSBC (66.4 percent); Future Generali (49.4 percent); TATA AIA (43.45 percent); and Shriram (27.4 percent), Maxlife (16.2 percent) among others.
When an investor submits his order before it matures, he only receives a small portion of his deposit. But different companies have different rules about this. According to the LIC policy, the premium is paid only after three full years. LIC did not want to comment on the matter.
Insurers often advise policy holders not to surrender the policy prematurely because the value has been reduced.
The fixed cost of the grant is specified in the legal documents. If the premiums are paid for three consecutive years, then the policy holder is eligible to receive the premium amount as per the terms of the policy.