The last few months have seen extreme volatility in the global and Indian financial markets, and you may be facing queries from your Customers with regards to the implications of such developments for us. We would like to take this opportunity to address these queries as follows:
§ How safe is the Indian life insurance industry?
o IRDA does not allow Indian insurers to invest overseas and we don’t have any international exposure in our investments, we have maintained our solvency ratio well in excess of 150% of the required solvency margin, reflecting our ability to fulfill all our obligations.
IRDA has also made a press release which is an assurance to all policy holders that things remain in order for domestic insurance industry. A Life Insurance product is designed to tackle highs & lows of the volatile market and enables you to meet your long term financial goals.
§ Should customers pay their premiums if the market is not doing well? Impact of volatile market on funds
o Equity markets pass through various high and low phases. Retail investors normally get carried away with this and buy when the markets are high and sell when the markets are low, leading to severe erosion of personal wealth. It is critical to understand that life insurance products are designed to tackle these highs and lows, and enable individuals to meet their long-term financial goals.
Since consumers invest systematically through regular premiums they are able to average the cost of their investments.
§ What should Customers do with funds already invested in equity markets?
o For existing investment in equity, we recommend they stay invested since switching to Debt now with a view of switching back to equities later is risky, as we are unlikely to get the timing right.
o Please don’t reduce the exposure to equities now, simply put, stay invested for the long term to meet your financial goals.
§ Recommendation or message to investors
o Sitting on safe option like cash will erode purchasing power. We need to save and invest in all kinds of markets, and invest rightly to protect real value of savings over a period in time. We strongly recommend that policy holders use our Automatic Transfer Plan (ATP) mechanism whereby you invest the money and select the Equity fund option and the money gets transferred from debt fund to the selected fund option over a period of time in equal installments.
So to put all things into a simple message we should not wait for the market to reach the bottom as we will never know that. We must stick to discipline of systematically investing in assets that position us best to meet long term goals.
§ What should Customers do if they are unable to pay the entire annual premium amount?
o If the customer is on yearly/half yearly mode and is eligible for a frequency change to half yearly/monthly frequency we can inform the customer to provide a written request and pay the subsequent premiums basis the new frequency.
As the future of Indian economy continues to remain strong, existing policyholders stand to gain over the long term; by staying with their life insurance plans. The current market scenario also provides an excellent opportunity to start investing in life insurance.
Especially in these times, We have created a strong trusted brand and a wide product portfolio over the last 8 years. By engaging with our customers and helping them understand the benefits of life insurance we will further enhance the credibility of our brand and products.
§ How safe is the Indian life insurance industry?
o IRDA does not allow Indian insurers to invest overseas and we don’t have any international exposure in our investments, we have maintained our solvency ratio well in excess of 150% of the required solvency margin, reflecting our ability to fulfill all our obligations.
IRDA has also made a press release which is an assurance to all policy holders that things remain in order for domestic insurance industry. A Life Insurance product is designed to tackle highs & lows of the volatile market and enables you to meet your long term financial goals.
§ Should customers pay their premiums if the market is not doing well? Impact of volatile market on funds
o Equity markets pass through various high and low phases. Retail investors normally get carried away with this and buy when the markets are high and sell when the markets are low, leading to severe erosion of personal wealth. It is critical to understand that life insurance products are designed to tackle these highs and lows, and enable individuals to meet their long-term financial goals.
Since consumers invest systematically through regular premiums they are able to average the cost of their investments.
§ What should Customers do with funds already invested in equity markets?
o For existing investment in equity, we recommend they stay invested since switching to Debt now with a view of switching back to equities later is risky, as we are unlikely to get the timing right.
o Please don’t reduce the exposure to equities now, simply put, stay invested for the long term to meet your financial goals.
§ Recommendation or message to investors
o Sitting on safe option like cash will erode purchasing power. We need to save and invest in all kinds of markets, and invest rightly to protect real value of savings over a period in time. We strongly recommend that policy holders use our Automatic Transfer Plan (ATP) mechanism whereby you invest the money and select the Equity fund option and the money gets transferred from debt fund to the selected fund option over a period of time in equal installments.
So to put all things into a simple message we should not wait for the market to reach the bottom as we will never know that. We must stick to discipline of systematically investing in assets that position us best to meet long term goals.
§ What should Customers do if they are unable to pay the entire annual premium amount?
o If the customer is on yearly/half yearly mode and is eligible for a frequency change to half yearly/monthly frequency we can inform the customer to provide a written request and pay the subsequent premiums basis the new frequency.
As the future of Indian economy continues to remain strong, existing policyholders stand to gain over the long term; by staying with their life insurance plans. The current market scenario also provides an excellent opportunity to start investing in life insurance.
Especially in these times, We have created a strong trusted brand and a wide product portfolio over the last 8 years. By engaging with our customers and helping them understand the benefits of life insurance we will further enhance the credibility of our brand and products.
