New Commission Rules For Life Insurers |
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March 6 - New Life Insurance commission rules were released last Friday by the South African government. The new rules, regarding the early termination values of life insurance savings products and broker commissions have been welcomed by both Life Insurers and Financial Planners alike. The rules essentially propose that half of the commission owed to the life insurance broker should be paid upfront, and the balance then paid over the remaining term of the policy, so that the policy-holder will continue to receive ongoing service. Currently, commission is paid over two years, split into two payments at the beginning of the policy. What the new life insurance commission rules mean is that a broker who receives a commission of 5% on a retirement annuity or endowment policy, will receive the commission as an upfront payment of 2.5% and will receive the further 2.5% monthly over the term of the policy. A 15% reduction in fund values is the maximum allowable for endowment policies that are paid up or have been surrendered, and for retirement annuities that are paid up or have been transferred. Furthermore, this 15% should be reduced each year that the life insurance policy is still in force until such time that no early termination penalty applies. In policies that are set to run for periods of 5 to 10 years, once the 5 year mark has been reached, the fund values may not be reduced. If an insurance policy is taken out for a term longer than 10 years, fund values may only be reduced if termination takes place within the initial 10 years. CEO of the Life Offices' Association (LOA), Gerhard Joubert said that although the life insurance industry needed more time to study the draft rules, it seemed that the new commission prototype was very fair; striking a good balance between upfront and ongoing insurance commissions. 'We believe the new model is fair to the intermediary, while ensuring the sustainability of the South African life insurance industry, and above all, ensuring that policyholders receive a fair deal.' he said. Related Insurance Articles: * Santam Ensures Policyholders over Blackout Damage * Liberty Group enters East African Market * Nelson Mandela Bay Residents Say No to Water Leak Insurance * Zimele Initiative Needs More Hype Injected Says Insurance Industry * Economic Fears Grip SA Life Insurance Industry * Former Santam CEO to head up Old Mutual Asia * SanlamConnect Building Financial Relationships * French Reinsurance Company Arrives in SA 
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| 3/14/2010 7:06:06 AM | |||||||||||||||||||||
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