KATHMANDU, June 8: The cases of surrendering life insurance policies by insured individuals before maturity period are on the rise, likely due to the slowdown in economic activities.
The records with the Nepal Insurance Authority (NIA) show that life insurance policies worth Rs 10.70 billion were surrendered in the first 10 months of the current fiscal year. According to the NIA, an average of over 8,500 insured individuals canceled their purchased insurance policies of Rs 1 billion every month in the review period.
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The NIA has maintained the rule barring the buyers of life insurance policies from surrendering before settling the premium payments for three years. Likewise, insurers cannot issue general life-insurance policies for less than five years of maturity.
A study carried out by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) two years ago shows that the economic slowdown and soaring prices of consumer goods are among the main factors that push the insured to cancel their insurance policy.
In the review period, Nepal Life Insurance Company had the largest cases of its policy withdrawal. A total of 24,330 policies of the company worth Rs 3.80 billion were canceled. It made out more than 35 percent of the total surrendered amounts.
