Page 24 - Life Insurance Today December 2017

Nothing has been done around tax ment-linked and pure term plans. This The most suitable policy for providing
laws and other regulations. Some comparison should include the risk such protection is a pure term plan.
measures that can be taken include cover, premium payable, maturity Whenever an agent tries to sell you an
linking tax deduction under Section value (as applicable) and commission insurance policy, ask for a comparison
80C to risk cover and not the premium payable to the insurance agent, broker of features and costs across the vari-
paid. Current laws do not allow deduc- or bank. ous options available. The first step in
tion if the premium is too high in com- buying insurance cover is to calculate
parison to the risk cover. However, The best move that the industry can one’s need. The next step is to find
many taxpayers are not aware of this, make, without push from anyone, is which insurance policy would serve
leading to either wrong deductions, starting to measure growth in terms of the purpose.
which cause loss to the exchequer, or per capita risk cover.
disallowed deductions, which result in As for tax planning, many options be-
a loss to the policyholder. Either way, What should buyers do? sides insurance are available. If you
there is mis-selling. want to take risk, invest in an equity-
Buyers need to bear in mind that an
insurance policy is supposed to pro- linked savings scheme. If you do not
Irdai could push insurance companies want to take risks, there are longer-
to consider risk cover as the criterion tect one against a financial loss in the
event of a casualty or untoward event. term bank fixed deposits that also
for continuation of an agency and not
In the case of life insurance policies, come under Section 80C.
focus on the premium amount. It
could also introduce regulations stipu- such an event is the untimely death of
an earning member of the family, re- Certain expenses are also eligible for
lating sellers disclose the commission
sulting in loss of future income. The Section 80C benefits: Children’s tuition
earned by them, as the Securities and
Exchange Board of India (Sebi) has best way to buy protection against fees, the principal repayment part of
such financial loss is to buy an insur- the home loan equated monthly in-
done for mutual fund agents and dis-
ance policy for an earning member of stalment (EMI), etc. Remember: As a
tributors.
the family such that the risk cover (or life insurance buyer, your primary
In addition, it can ask insurance com- sum assured) is as high as possible for need is to get a risk cover. Focus on
panies to provide customers a com- the lowest amount of premium pay- that. That will save you from mis-sell-
parison of various products – invest- able. ing, too. (Source : Business Standard)

IRDAI for special status to Rail Bonds

The Insurance Regulatory and Development Authority of India (IRDAI), Indian Railways and Life Insurance Corpora-
tion of India are in disagreement over the ‘status’ of the proposed borrowing by the Railways as the regulator de-
mands that the funds belonging to millions of common insurers be ring-fenced as stipulated by regulations, two people
familiar with the developments said.

The insurance regulator wants the government to back the bonds with a sovereign guarantee and a gazette notifica-
tion. This would also ensure that it gets high investment grade credit rating, said those people who did not want to
be identified. “IRDAI wants the department of economic affairs to classify the railway bond as special bond, notifying
this in a special gazette for LIC to invest Rs 1.5 lakh crore in the Railways,” said one of the persons cited above.
The issue was discussed on Tuesday in a meeting of officials from the departments of financial services and the eco-
nomic affairs, the Railway Board and the Irda. It was attended by Mritunjay Singh, under secretary in the department
of financial services; K Kadiresan, from the investment department of LIC; Namita Mehrotra, executive director of
Railway Board; and SN Jayasimhan of IRDAI.

“Challenges are what make life interesting and overcoming them is what makes life meaningful.”4

24 December 2017 Life Insurance Today

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