Kathmandu. More than 12 lakh insurance policies issued by life insurance companies are in inactive condition. Such a large number of insurance policies have been found inactive as the insured has not deposited the installment amount even after 6 months from the date of payment of the renewal insurance premium.
According to the data bulletin published by the Nepal Insurance Authority, there are 1,220,415 insurance policies in the current state of inactivity. In such a situation, in the event of an unforeseen event to the life of the insured, he or his dependent family members are deprived of the benefit of insurance.
According to the NEA, the insured amount of the insurance policy has been spent at Rs 36.98 billion.
According to NEA, the number of insurance policies issued till mid-December of the last fiscal year was 12,14,500. The amount of insurance policy spent was Rs 35.41 billion.
Although the NEA had directed to reduce the percentage of insurance policies spent while approving the annual financial statement of life insurers, it has not been brought under control. In the first five months of the fiscal year 2081/82, the number of insurance policies has increased by 4.42 percent.
Meanwhile, in the current fiscal year 2082/83, the insured has withdrawn 37,149 life insurance policies by surrendering them prematurely. According to NEA, the insured have withdrawn Rs 5.69 billion in the first five months of the current fiscal year.
Why is the insurance policy killed prematurely?
There are some solid reasons behind the completion or surrender of insurance policies in the life insurance market in Nepal.
The first reason is a vague understanding or awareness of life insurance. In the absence of adequate information about insurance, the general public is not able to prioritise it, and the policy may have to be passed or surrendered.
The second is the mismarketing of the agent and the insured’s purchasing or saving capacity. The insured cannot pay the installment of the insurance policy regularly when the agent provides life insurance without considering the stability of the insured’s financial status or the reliability of the source of income. And, eventually, the insurance policy goes to the point of surrender.
Poor insurance service: If the life insurer does not inform the insured about the date of payment of the premium after the sale of the policy, the insurance policy becomes lapsed. Once it is over, the interest penalty and the second installment are added to the insured’s savings. Apart from this, the insured has not been given the facility to pay the principal or interest of the loan through easy means after taking the loan of the policy.
Although there is a facility of loan payment through digital wallet, most of the insured are not aware of it. The compulsion to pay a minimum of Rs 5,000 at a time while making the payment through the wallet also increases the interest and causes loss to the insured.
