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Irda unveils simplified, standard products for rural markets

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Irda unveils simplified, standard products for rural markets
NEW DELHI: Regulator Irda today unveiled simplified, standard products designed to be sold by life insurance companies through nearly one lakh Common Services Centers so as to enhance insurance penetration in rural area.
 

Under this distribution model two kinds of products with low ticket size will be offered for sale. One savings product and a term plan will be available for sale.

"The product to be marketed through the CSC distribution model shall be prefixed with the word 'CSC' to clearly distinguish these products as exclusive CSC products," Irda said in a notification.

"Every insurer shall file the products under the current file and use procedure for distribution under this channel," it said.

According to Max Life Insurance Managing Director Rajesh Sud this would be another business opportunity for companies to expand reach beyond cities.

The regulator has simplified products and made it relevant to suit the targeted clientele, he said, adding that products have been designed taking into consideration their lumpy income.

This model is on completely voluntary basis, he said. Besides the commission to be paid to CSC to procure the new business, there would be service charges for post sale services of the policy.

The maximum commission in the first year will not be more than 5 per cent of the premiums paid in the f first year. There will not be any commission from the second year onwards, Irda said.

The service charges shall be a fixed amount for every activity that would be undertaken by the CSC, it added.

For standard savings product, the term would be between 5-15 years and the maximum premium would be 20,000.

As far as standard term insurance product is concerned, the maximum sum assured would be Rs 2 lakh.

The guidelines are issued to study the entire business sourced through the CSC distribution on a pilot basis for a period of at least one year, it said.

 

The Authority shall review the business sourced through the CSC distribution on a regular basis and review the guidelines, if required, it added.

PTI

Story first published: Thursday, January 30, 2014, 12:27 [IST]
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