Kathmandu: Beema Samiti, the insurance sector regulator, has exempted the old insurance policies from the Life Insurance Policy Directives 2021.
As per Beema Samiti,the condition of surrender value calculation only after 3 years from the date of issue will not be applicable for the policies sold before the Policy Directives was issued.
As per Beema Samiti, now the life insurers can calculate the surrender value for a policy which was issued before the implementation of the ‘Life Insurance Policy Directives 2021’.The directives was implemented on 8 July,2021.But in context of the Single Premium Policy the exemption is applicable for the policies that are sold before mid April,2021 only.
A life insurance policy is a contract. It involves an agreement between the insurance company and the insured. As per experts suggestion, new laws are forward looking. Laws of retrospective effect are not enacted except in exceptional cases. However, there is a practice that the law of the nature of providing facilities is valid even if it has a retrospective effect.
Samiti has stated that the same rules as mentioned in the policy contract will be applied for the old policies. Prior to the issuance of the new directive, it was possible to surrender only after completion of two years. Similarly, in the Directives, there is a provision that restricts the surrender value calculation before the completion of three years of policy issue.
Now, the regulator is hopeful that the new rule will be effective in controlling the ill practice of disbursing huge amount of loan against single premium policy within a short span of time.
It is the right of the insured to surrender. If the insured does not want or cannot continue the policy he has purchased, he can surrender. According to this rule, companies have provided facility with surrender period in each policy. But in Nepal, agents and branch managers have used this system as a weapon to achieve their targets. Issuing a policy to meet the target and surrendering the policy within few months or within a year will result in extreme loss to the company. Samiti has extended the surrender period after the wrong practices started taking place on the basis of the right intention.