Kathmandu, June 23
The Insurance Board (IB), the insurance sector regulator, has barred insurers from extending agent commission on sales of foreign employment (term) life insurance policies. This has reduced premium cost on foreign employment policies by 12 per cent.
Until now, insurance companies were allowed to extend a commission of 10 per cent of the premium fee to insurance agents in the first year of sales of policy. In the subsequent years, commission amount was limited to five per cent of the premium cost.
“We decided to scrap this provision because it is mandatory for Nepalis leaving the country for overseas employment through formal channel to purchase foreign employment policies. This means involvement of agents is not necessary for sales of these policies,” IB Director Shreeman Karki told The Himalayan Times.
The IB’s latest move comes almost two-and-a-half months after it doubled the coverage amount of foreign employment policies. On April 13, the IB raised the sum insured on foreign employment policies to Rs one million from Rs 500,000 in the past.
Although the policy’s coverage jumped by 100 per cent, the premium cost was raised by only 65 per cent at that time. Now with the decision to scrap the provision on agent commission, the financial burden added to foreign job-seekers following hike in coverage amount has gone down.
As per the new policy rates, foreign job-seekers aged 18 to 35 will have to deposit one-time premium of Rs 2,646 to purchase a policy with a tenure of two years. These premium fees differ based on age of foreign job aspirants and the tenure of the policy.
Once the premium is deposited, policyholders become entitled to compensation of Rs one million in case of death in foreign land or permanent full disability due to workplace accident. Policyholders can file claim for the same compensation amount of Rs one million if they lose vision in both the eyes or fail to move both the wrists or both the ankles. The same compensation is also extended for loss of sight in one eye and movement of a wrist; or loss of sight in one eye and movement of an ankle.
Policyholders can also claim for compensation in the range of four per cent to 50 per cent of the sum insured of Rs one million if they lose or there is substantiate impairment of movement in various body parts.
On top of these compensation amounts, foreign employment policies also entitle policyholders to another Rs 200,000 for loss of income due to death or workplace injuries.
In case of death, additional Rs 100,000 is extended to cover the funeral costs and up to Rs 100,000 is provided to bring the dead body back from the foreign land. Similarly, in case of injuries, medical cost of up to Rs 100,000 is provided to the policyholder.
A version of this article appears in print on June 24, 2016 of The Himalayan Times.