What if the term insurance company closes off?

POSTED BY Ramz ON May 14, 2012 3:25 pm COMMENTS (5)


I know this is a rather strange question. But was asked by one of my friend when discussing about term insurance benefits. Just thinking of the worst case 🙂

Since we will be taking term insurance for more than 20 years or more based on our age(in general), How are we sure that the company which we had taken the term insurance still remains in force in long run.

For LIC we know the credibility and also my friend was suggesting, its better we go for some standard ones while taking term insurance plans as it is for longer duration.

I am completely unaware of the terms and conditions on which these term insurance company policies run.

Thanks in advance

5 replies on this article “What if the term insurance company closes off?”

  1. Raman Kothalanka says:

    IRDA closely observing the financial status their policies and claim settlements and also gives the suggestions and orders of the Insurgence companies.Insurece companies have diposited hundreds of crores of rupees.

    In worst condition it will be merged with other company.

  2. Dear Ramz, instead of directly answering your query, I w’d like to search for following names –

    AMP Sanmar, HDFC Chubb & HDFC Ergo



  3. Unless death targets the policy holders of the same insurer for extended periods of time you should be fine.

    Each company has its own set of estimates/calculation on what the approximate claim amounts need to be paid in future etc. There is also an amount from each premium they park – for reserve purposes. It is very rare an Insurance company will fail in India. But chances cannot be ruled out completely, as your fears can still come true although remotely.

    As wUc said it is highly likely IRDA would intervene and in my personal opinion they will all force our regular scapegoat LIC to absorb the failing company. The premium for the remaining years can go up but I believe the policies would be honored -and the policy holders would not be left in lurch

  4. durga says:

    Very good question, I too have same doubt what if the insurance company closes during the term plan duration?

  5. I dont think this case or situation may arise in india.There could be possibility of take over or merger. in this case new company rules would be applicable..

    Worst case: IRDA or Govt will back in case of such a situation arise.

    Others can correct me if i sound wrong.

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