KATHMANDU, July 9: The Insurance Board (IB) has barred buyers of life insurance policies from surrendering before settling the premium payments for three years. Similarly, an insured individual also cannot take loans against his/her insurance policy before the completion of three years of purchasing the policy.
Enforcing a directive for life-insurers, the board has come up with the provisions. According to the IB officials, the regulator has maintained the provisions citing misconduct surfacing in the sector.
Earlier, the timeframe for surrender and receiving loans by an insured person was maintained at one year. However, many insurance agents in alliance with the insured persons had been found taking undue benefits of this provision. “Insurance agents gather large amounts of money as their commission by compelling the insured to surrender the insurance policy before its maturity,” an official said.
With the new rule in place, insurers cannot issue general life-insurance policies for less than five years of maturity. Similarly, they need to carry out risk analysis while issuing the policies to their clients. Similarly, the buyers of policies worth more than Rs 500,000 need to disclose their income sources while being insured under life- insurance.