If you choose the right life insurance policy, the coverage can act as a savings plan. Usually, your representative stays in touch with you, often reminding you of the premium payment deadlines. What if you do not get any reminders? If you miss the payment of the last three premiums due to this reason or the other, your policy can be considered as expired.
This could mean that you have an orphaned life cover policy, meaning that both you and your agent abandoned the coverage (intentionally or otherwise). This could be because neither you nor your agent paid enough attention to it, and so your insurance savings plan is at risk.
Orphaned Policies – Role of Agent
You might avoid the abovementioned situation if you live in an urban area with reliable access to online insurance marketplaces. These marketplaces ensure you are aware of insurance payment deadlines by sending you several alerts when you acquire insurance from them. They may even provide discounts to encourage you to pay your premiums in advance or all at once for several years. However, in rural areas, the agent remains the principal point of contact between the insured and the insurer. They issue premium receipts, collect the premiums, and deposit them with the insurer. They are essential for keeping the policies in effect. Here, orphaned policies are on the rise.
Most orphaned policies in rural areas result from an agent leaving the firm or the company firing an agent, frequently without informing the numerous insured people in their care. The insured person is clueless about handling premium payments. By the time the company replaces the agent, many policies will have already been abandoned.
IRDA’s Role in Ensuring Policy Continuation
The country’s regulatory body for the insurance industry is the Insurance Regulatory and Development Authority of India (IRDA). It has taken numerous measures to lessen the occurrence of orphaned policies after becoming aware of the problem.
The insurance company must appoint an “allottee agent” when an agent quits or is fired. The orphan policy is then allocated to the allottee agent, who will help maintain it and perform all further policy services. This agent’s service as an agent on the insurer’s rolls should have lasted at least two years.
Orphaned Policies: IRDA Guidelines for Insurers/Allottee Agents
The insurer must inform the policyholders of all pertinent information regarding the new agent after the orphaned policy has been assigned to an allottee agent.
All current orphaned policyholders must be taken care of by the allottee agent. All pertinent information on the policyholders, including their addresses, is sent to the agent. The agent is prohibited from delegating maintenance of these policies to a third party. However, it does not prevent the allottee agent from contacting these policyholders to ask for new business. The insurer cannot accept new business from those policyholders and the designated agent until six months have passed since the orphaned life insurance policy’s date of surrender.
The allottee agent can get commissions on expired policies. They will be qualified for these benefits once the policies have been fully revived, including all back premium payments and subsequent premium payments.
Even if the agent for the initial allottee is still listed on the insurer’s rolls, if an allotted policy expires after being resurrected, the insurer may reassign it to another allottee. Policies with a single premium or no additional premiums are not eligible for allocation in the manner described above.
Your Role in Keeping Policies Active
As the insured, we also must keep the policy in good standing. Our insurance policy serves as a safety net. Protecting it is in our best interests. There are easy ways to accomplish this.
- Find a good life cover policy whose premiums will be within your budget. This will reduce the likelihood of failing to pay the premium on time. A life insurance calculator can help with this.
- Record the policy’s essential information. You can do it in a book, a spreadsheet, or an online document. The information must include the required premium amount, the due date for payment, and crucial phone numbers, including the location of the insurer’s nearest office.
- To file a complaint, use the online complaints forum. You will need the insurer’s email address and/or the local insurer’s office ID. Send them a letter outlining your concerns and inquiries. This has two benefits: it ensures that your objections are heard and provides you with a record of the exchange. If the insurance decides to dispute your claim, this might be helpful.
- Insurance ombudsman: The IRDA takes a strong stance against an insurer providing subpar service, mainly if the insured is disadvantaged. By law, every insurer must publicly display the insurance ombudsman’s email address. Writing to the insurance ombudsman while designating the mail for the insurer is an excellent approach if you have a valid problem.
