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How to cope up with an 'orphan' life insurance policy

March 16, 2019 1585
Have you bought your life insurance policy from an agent? Yes, the very same lot that would do their best to sell the policy to you highlighting the positives (mostly) and help you with all the details of applying for a new policy right from the scratch. They are so diligent that they would also remind you about your premium updates, as well as what is due when. However, if for some reason, you don't receive any update from them for a long time, reason being that they have left the organization. Chances are you may feel "orphaned".

The insurance agents are the one point of contact between the insurer and the insured. His role becomes pertinent when you have to renew your policy. However, if an agent switches profession or leaves the company he worked with earlier, clients are left in the lurch. Consequently, the client's policy might lapse or premium payment gets delayed. Such clients are called orphan life insurance policyholders.

According to the 2010-11 IRDAI Annual Report, the total number of agents appointed by life insurance companies was 5.65 lakh, while the number of agents terminated was 8.01 lakh. To meet the orphaned policyholders' demand and help them, the IRDAI has come up with a set of guidelines.

Here is a guide to the scenarios you may encounter as an insured, and the action you will need to take:

#1: Agent quits the insurance industry

Whether an agent is there or not, the staff at the insurance company has to offer you the services as promised in their policy. The company will assign a new agent as per the following guidelines:

Only an orphan policy that remains lapsed (i.e., premium remains unpaid after six months of the due date)

Single premium policies or policies on which no further premium is due are not eligible

The insurer will have to notify particulars of "Allottee Agent" to the policyholders concerned

If you surrender the policy after the allotment but before revival, the insurer will not be liable to accept new business from the same allotted agent for the same policyholder until six months from surrendering the orphan policy

The number of policies allotted to the agent cannot exceed 20 per cent of the total number of active policies introduced by him.

You will be informed about the changes by the company however, you will be asked to check on the details with an inhouse team on your own.

#2: Agent ends business relation with your parent insurance company

The policy isn't orphaned if the agent terminates agreement with your insurance company however, carries on with another insurer. In that case, the same agent can continue with your services. Further, if the agent has served the policy for five years, they can continue to receive commission.

# 3: Agent bank and insurance company end their ties

There are banks that sell insurance products that contribute to the insurer's business. However, many also end their partnerships with the insurers. Take the case of IndusInd Bank scrapping its insurance partnership with Aviva to sign a fresh agreement with Birla Sun Life Insurance.

Consequently, a policyholder is troubled if there is any change in the bank's insurance partner. To combat this problem of "orphaned" state, there are call centers of insurance companies that cater to policyholders.

#4: You don't like the services of the agent

You can always end the services of the existing agent if you are dissatisfied with his services. You can seek help from the insurance companies directly.

What are your responsibilities as a policyholder

Reach out to the insurance company through all means - email, call centers, visiting nearby branches etc.

Keep yourself up-to-date with your policy renewal.

Provide accurate and true information to the insurer.

HDFC Life offers numerous term insurance plans that are aimed at securing your financial future and safeguarding the fiscal security of your loved ones. For details, click on the mentioned link: https://www.hdfclife.com/term-insurance-plans.


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HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Email: [email protected], Tel No: 1800-266-9777 (10 am to 7 pm). The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited (“HDFC Limited”) and is used by HDFC Life under an agreement entered into with HDFC Limited.

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