R.M. Vishakha, MD and CEO, IndiaFirst Life Insurance Co. Ltd
Non-participating products state what customer pays and what she receives during the policy, including on maturity, along with the life cover benefit. It can be argued that it is simpler for a layman to understand real numbers than net return and adjusted rate of returns.
How disclosures of returns should be made should be decided on the basis of the objective of disclosure. If it is to ensure transparency, then the evaluation needs to be against the returns generated by the insurer versus the returns guaranteed to the customer, also referred to as Reduction in Yield. This cannot be achieved by disclosing the net return. If it is about enabling customers to make an informed decision, effective comparisons between non-par products can be made on absolute amount basis.
