AS requested by our readers, here is an excerpt from the recommendations of Swarup Committee’ report for Insurance Sector / ULIP Case.
All retail financial products should go no-load by April 2011. The pension product in the NPS is already no-load. Mutual funds have become no-load with effect from 1 August 2009. Insurance policies need to remove the bias towards selling the policy with the highest commission. Because there are almost three million small agents who will have to adjust to a new way of earning money, it is suggested that immediately the upfront commissions embedded in the premium paid be cut to no more than 15 per cent of the premium. This should fall to 7 per cent in 2010 and become nil by April 2011. The interim period should be used by insurance companies to help their agents make the transition to a more mature way of selling and advising.