Page 119 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes other sudden drop in income. The premium holiday option ensures continued insurance
protection by transferring the risk premium and charges due from the account value,
which is built up over a period. But the policy would lapse and this benefit would not be
available if premium payments are stopped within three years.
Top-up Premiums: Top up premiums are irregular dump-in amounts allowed in a ULIP.
Up to now, there were no restrictions; it was possible, for example, to dump in 1 crores in
a ULIP and invest the entire amount in the market. But this vitiates the basic characteristic
of the policy by making the insurance component insignificant. To plug this loophole,
IRDA has prescribed that a sum assured must back any dump-in that exceeds 25 per cent of
normal premium, which will be constant throughout the term of the policy. Any
appropriation towards a dump-in can take place only if the normal premiums are paid.
Withdrawals from ULIPs: Earlier, withdrawals from ULIPs were possible even within a
year of issue. Depending on the option selected, they were reduced from the sum assured,
resulting in dilution of death benefits to the nominees. Now, withdrawals will be allowed
only after three years. The new guidelines provide that except for withdrawals made
during the two years immediately preceding death, no other withdrawals can be reduced
from the sum assured. But once the customer is past the age of 60, all withdrawals can be
reduced from the sum assured.
Lock-in Period: A top-up premium cannot be withdrawn for three years. This places ULIPs
on par with mutual fund contributions under Section 80C of the Income Tax Act, 1961. The
only relaxation in this condition is on withdrawal of top-up premiums made during the
last three years of the policy contract.
Settlement Options: The policyholder has settlement options, to receive the policy benefits
in various forms, rather than a lump sum. For example, the company can give the
policyholder an option to receive the maturity benefit in the form of a monthly pension.
IRDA has restricted such extended periods of settlement to five years from the date of
maturity. The company should also make clear the inherent risk involved in extended
periods of settlement.

8.4.4 Major Players

The main player of this sector is Life Insurance Corporation of India (LIC). But the sector is very
strong and well built. Let us go through brief composition of all the institutions of this sector.

Bajaj Allianz Life Insurance

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company
and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest
asset managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000
Crores). Allianz SE has over 115 years of financial experience and is present in over 70 countries
around the world.
At Bajaj Allianz Life Insurance is customer delight and their philosophy is to ensure excellent
insurance and investment solutions by offering customised products, supported by the best
technology.

Birla Sun Life Insurance Company Limited

Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance Solutions in India.
Within 4 years of its launch, BSLI cemented its position as a leading player in the Private Life

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