Kathmandu. According to the study report of the life insurance sector released by the Nepal Insurance Authority, it has emerged as a serious challenge in the insurance market of Nepal to cancel the insurance policies without renewing them on time.
According to the report, in the financial year 2080. In the year 2081 alone, more than 11,58,000 life insurance policies worth more than Rs 34.37 billion have been renewed and have become inactive. FY 2081. 82 The value of this inoperative insurance policy has increased to Rs 36.51 billion.
Similarly, in the financial year 2080. In 81, 1,13,976 insurance policies have been surrendered, out of which Rs 14.50 billion has come out. Inactive insurance policy means that insurance cover has been suspended due to non-payment of insurance premiums regularly. Surrender of insurance is when the insured cancels his insurance and withdraws its surrender value. This has robbed the insured of the long-term financial security. The surrender of the insurance policy before the stipulated period has also dealt a major blow to the financial stability and cash flow of the insurance companies due to the high cost burden of the initial years.
The report has pointed out multi-faceted reasons why insurance policies become inoperative rather than renewed on time and why insureds are forced to surrender their policies. The main reasons for this are the personal financial crisis of the insured, inflation (inflation), instability in income and the compulsion to go abroad for employment.
While the survey respondents gave multiple answers, 78.9 per cent of the insured said financial hardship was the main reason. 61.2 per cent said they had to surrender their insurance to get immediate cash for emergency household expenses, medical treatment or children’s education.
In this process, the insured themselves buying expensive policies without considering their actual income, the agents pressuring them to get insurance on the basis of personal or social relationships without evaluating their actual financial capacity, and lack of clear understanding or financial literacy about insurance have played a big role. Similarly, poor service of insurers, complaints of delay in claim payment of 65.2 percent and low bonus rate compared to banks and cooperatives have also disappointed the insured.
