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Which leads to
Rev ise d
IT IS NOT POSSIBLE TO INDICATE RETURNS, LEAVE ALONE GUARANTEEING IN THE LONG RUN
The reasons are : Government has decided to reduce its interest burden on its borrowings Interest Rate on Government borrowings depends on Domestic Inflation Rate Government Borrowing Program & Fiscal Deficit Global Interest Rate Scenario Prevailing Exchange Rates ie. Rs Vz $ etc.
1 2 .5 0 8 .1 0 4 .6 0 4 .4 0 5 .9 0 3 .3 0 7 .1 0 1 2 .0 0 1 2 .0 0 1 2.0 0 1 2 .0 0 1 2 .0 0 1 2 .0 0 1 1 .0 0
5 .0 3 9 .5 0
1 6 .0 0 1 4 .0 0 1 2 .0 0 1 0 .0 0 8 .0 0 6 .0 0 4 .0 0 2 .0 0 0 .0 0
94 -95 95 -96 96 -97 97 -98 98 -99 99 -00 00 -01 NO W
G V SE U ITIES OT C R ( IN LU IN C TR L G V S U ITIES) C D G EN A O T EC R IN A FR STR C TR U U E O ER A PR V SEC R TH P O ED U ITIES O ER IN ESTM T A PER PR . N R S TH V EN S U O M This is applicable to all Life Insurance C panies om SU PLU D R S ISTR U NR U TIO IB TIO EG LA N T PO Y H LD S O LIC O ER T EQ IT O N R O T E LIFE C O U Y W E S F H O
90% 10%
Q : You may get the returns, but you may decide not to pass on to Policyholders Q: Pvt Cos are profit driven, the promoters may take all the benefits ?
The policy holders funds and the Promoters funds are two separate pools. Surplus arising out of Policyholders fund has to be necessarily distributed as Per IRDA guidelines Pvt Cos are profit driven and it actually benefits the policyholders.
Other arguments
Is it possible for any one to tell what will be the
government borrowing rate , five years from now ?
Higher Returns may be paid at the cost of othersLeading to Unfair practices - Regulator will step in
Income for a Life Insurance company Expenses for Life Insurance Company Premium Income Interest Income from Investments Commission Overhead expenses Claims Payment Provision for reserves *** Balance - Surplus for distribution as Bonus & Dividend
*** -Life insurance cos having guaranteed product have to make higher provision means = less surplus for distribution as BONUS in the current year
Higher Returns may be paid at the cost of othersLeading to Unfair practices - Regulator will step in