Kathmandu: Life insurance companies are preparing to use scissors on the bonus while surrendering the policy.
Life insurance companies have been providing bonuses to the insured who come to surrender the insurance policy for the same number of years as the insured has paid the premium. But now the insured, who has paid the renewal premium regularly, may get the bonus amount only for the period completed on the date of surrender i.e. based on days count.
If the insured applies to close the policy for any reason before the expiry date of a life insurance policy, it is called policy surrender. Surrender of insurance policy is a matter of loss for both the insured and the insurance company.
The share of the profit made available to the insured from the net profit earned with the premium investment collected from the insured is called bonus.
The proposed method:
The insured has already paid6 premiums including the first premium for a period of 5 years. If the policy is surrendered prior to the completion of sixth year,
insurance companies have argued that they cannot give a full year’s bonus as the insured has come to surrender the insurance policy without making any profit by investing the last premium for one full year.
The Life Insurance Association of Nepal has suggested the insurance companies to file an application before the Beema Samiti. for approval to implement the new method of bonus calculation.
Samiti is the regulatory body. Until Samiti approves the new method of calculating the bonus amount, the insurance companies will not be allowed to implement the new rules unilaterally.