Life insurance is a contract
bound between an insurance policy holder and an insurer, where the insurer
pledges to pay a designated and fixed sum of money upon the demise of the insured
individual. Depending on the contract, various other events like terminal
illness or critical illness may also prompt for payment. The policy holder has
to pay a premium, either in installments or as a lump sum.
Some times other expenses such
as the funeral expenses are also included in the premium.
The main advantage for the
policy owner is a “peace of mind” in understanding that the death of the
insured individual will not result in any financial difficulties for the loved
ones.
Life policies are legal
contracts and the terms and conditions of the contract describe the limitations
of the insured events. However, specific exclusions are more often not
described due to the limit of the liability of the insurer. Some common
examples regarding claims such as suicide, fraud, war, riot and civil
commotion, etc are not included in cover for claim of life insurance.
Life insurance is the fastest
growing sector in India since 2000. The Indian government has given the private
players and FDI’s upto 26% stake in the insurance sector. Life insurance in
India was nationalized by incorporating LIC in 1956. All private life insurance
companies during that time were taken over and governed by LIC.
The government of Republic of
India set up the RN Malhotra committee in 1993 to lay down a road map which
would lead to privatization of the life insurance sector in India.
Though the committee submitted
its report in 1994, it took another 6 years before the legislation was passed
in the year 2000, legislation amendment of the insurance act of 1938 took place
and legislating the insurance regulatory and development authority act was
passed in 2000. In the same year, the newly appointed insurance regulator –
insurance regulatory and development authority IRDA began issuing licenses to
private life insurance.
Some of the Life insurers in
private sector are mentioned below:
•
SBI Life Insurance
•
Metlife India Life Insurance
•
ICICI Prudential Life Insurance
•
Bajaj Allianz Life
•
Max New York Life Insurance
•
Sahara Life Insurance
•
Tata AIG Life
•
HDFC Standard Life
•
Birla Sunlife
•
Kotak Life Insurance
•
Aviva Life Insurance
•
Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC
•
ING Vysya Life Insurance
•
Shriram Life Insurance
•
Bharti AXA Life Insurance Co Ltd
•
Future Generali Life Insurance Co Ltd
•
IDBI Fedaral Life Insurance
•
AEGON Religare Life Insurance
•
DLF Pramerica Life Insurance
•
CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE
•
IndiaFirst_Life_Insurance_Company
•
Star Union Dia-ichi Life Insurance Co. Ltd
•
Edelweiss Tokio Life Insurance Company Ltd
According to the current FDI
norms, foreign participation in an insurance company has been restricted to 26%
of its equity. The insurance regulators have stipulated that foreign investment
in Indian Insurance companies to be limited to 26% of total equity issued by
investment includes foreign insurance companies for a change in regulations to
increase the FDI limit by 49%.
The Indian government has agreed
to an increase in the FDI limit, which requires a change in the Insurance Act.
The union budget for the fiscal year 2005 had suggested that the ceiling on
foreign holdings can be increased upto 49%.
A change in the insurance act
will require the passing of the bill in both the houses of the
parliament. The Indian government has tabled the bill in the upper house
of parliament in August 2010.
At Angel Broking, the financial
advisors not only explain all the nuances on Life Insurance but also help the
investor in choosing the right Insurance Policy for self. For more details,
please contact: Tel: (022) 3935 7600 or SMS EBRO to 5757587.
