The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous, statutory agency tasked with regulating and promoting the insurance and re-insurance industries in India.
It was constituted by the Insurance Regulatory and Development Authority Act, 1999, an act of Parliament passed by the government of India. The IRDAI attempted to raise the foreign direct investment (FDI) limit in the insurance sector to 49 percent from its current 26 percent. The FDI limit in the sector was raised to 49 percent in June 2016. In India insurance was mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthashastra), which examined the pooling of resources for redistribution after fire, floods, epidemics and famine.
In 1914, the government of India began publishing insurance-company returns. The Indian Life Assurance Companies Act, 1912 was the first statute regulating life insurance. In 1928, the Indian Insurance Companies Act was enacted to enable the government to collect statistical information about life- and non-life-insurance business conducted in India by Indian and foreign insurers, including provident insurance societies. In 1938, the legislation was consolidated and amended by the Insurance Act, 1938, with comprehensive provisions to control the activities of insurers.
The Insurance Amendment Act of 1950 abolished principal agencies, but the level of competition was high and there were allegations of unfair trade practices. The Government of India decided to nationalize the insurance industry.
An ordinance was issued on 19 January 1956, nationalizing the life-insurance sector, and the Life Insurance Corporation was established that year. The LIC absorbed 154 Indian and 16 non-Indian insurers and 75 provident societies.
The LIC had a monopoly until the late 1990s, when the insurance industry was reopened to the private sector. Objectives of the IRDA include promoting competition to enhance customer satisfaction with increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
The IRDA opened up the market in August 2000 with an invitation for registration applications; foreign companies were allowed ownership up to 26 percent. The authority, with the power to frame regulations under Section 114A of the Insurance Act, 1938, has framed regulations ranging from company registrations to the protection of policyholder interests since 2000.
What do you mean by Life Insurance.
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death.
Why Term Plan Is Necessary.
All life insurance companies in India have term plans in their bouquet of offerings. The rates are also quite competitive. It really does not matter which company you take the cover from (IRDA has done a pretty good job at regulating the insurance companies – all of them are safe). Based on your comfort level you may choose to take your term plan.
Term plans give us very high life covers for very low premiums. But Term Plans do not give anything back at the end of the term (life cover period) if you outlive it. The product is made up of only the protection element, and no maturity benefit is associated with the policy. This policy will only make a payment at the occurrence of a precise event i.e. death.
A term plan is ideally suited for individuals who are the single bread earner of the family with high financial liabilities such as a house loan, children’s education, dependent spouse and children. It’s advised to start at a younger age as premiums will be low. Also, when the insured is young, he/she can avail of longer term coverage.