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IDBI to continue as ‘Indian private sector bank’ post strategic sale


The government’s residual 15 per cent stake in IDBI Bank post the strategic disinvestment of the lender will likely be considered as ‘public shareholding’ and a reasonable period may be given to the potential buyer to comply with minimum public shareholding (MPS) norm, finance ministry said on Sunday. IDBI Bank will operate as an ‘Indian private sector bank’ after its strategic sale.

Department of investment and public asset management (Dipam) said that the winning bidder will have no restriction on undertaking a corporate restructuring of the subsidiaries of the bank. It also said that certain asset sizes and timing thresholds related to asset stripping would be provided to give flexibility in operations to the successful bidder.

“The aspects in respect of the treatment of GOI’s residual shareholding and the appropriate transition period for MPS compliance are under due consideration and would, accordingly, be suitably advised to the Qualified Interested Parties at the request for proposal stage,”  Dipam said responding to a batch of 167 queries from potential buyers. On October 7, the Centre invited expressions of interest  for IDBI Bank and offered to sell a total of 60.72 per cent stake, including 30.48 per cent from the government and 30.24 per cent from LIC, along with the transfer of management control. Yet, both the government and LIC will have a 34 per cent residual stake in the lender (19 per cent and 15 per cent by LIC and government, respectively).

According to Sebi, a company is required to have a minimum shareholding of 25 per cent within one year of the merger with/acquisition of a private company or three years after listing. FE





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IRDAI unveils new draft on expenses


The Insurance Regulatory and Development Authority of India (IRDAI) has announced a revised exposure draft on the expenses of management (EoM) for the non-life insurance companies and proposed the removal of caps on payment of commission to insurance agents and intermediaries.

It has also proposed a revised 30 per cent and 35 per cent caps on EoM for general insurers and standalone health insurers, respectively, after taking into consideration the insurance industry’s views.

In the earlier exposure draft, released on August 23, it had proposed to put a lower cap of 20 per cent on commission paid to the agents and intermediaries of both non-life and life insurance companies. It had proposed a 30 per cent cap on EoM for the general insurance companies in the exposure draft issued on August 1.

The regulator has streamlined the expenses of management (EoM) guidelines for insurance companies, now proposing a blanket cap on EoM to the extent of 30 per cent of gross written premium in India for general insurance companies and 35 per cent for standalone health insurance companies.

EoM includes operating expenses, commission to insurance agents and intermediaries and commission and expenses on reinsurance. EoM is currently in the range of 20 per cent to 37.5 per cent for non-life insurers. The additional allowable expenses within the overall expense cap now also include expenses incurred towards government schemes such as Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Fasal Bima Yoyaja (15 per cent) as well as expenses incurred towards promoting insuretech and insurance awareness of up to 5 per cent to widen customer reach.





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Collect data of health professionals from repository: IRDAI to insurers


The Insurance Regulatory and Development Authority of India (IRDAI) has advised insurance companies to capture the identity (ID) of medical practitioners from a repository for verification while issuing or renewing health policies. The new system is expected to enable seamless, cashless functioning of outpatient treatment (OPD) across the country.

According to IRDAI, insurers can validate their ID from the Healthcare Professional Registry (HPR), a comprehensive repository of registered and verified practitioners of healthcare professionals delivering modern as well as traditional healthcare services across India. “This will enable digitization and ease the process of buying and selling the Professional Indemnity policies and push for HPR registration among the healthcare professionals,” the regulator said.

This will also help in avoiding medical malpractices under professional indemnity cover.

General and health insurers offering health insurance policies can also consider leveraging on the Health Professional Registry for building up the network of doctors, physicians or other healthcare professionals for providing OPD or other healthcare services, IRDAI said.

As part of Ayushman Bharat Digital Mission, the National Health Authority (NHA) has incorporated a Healthcare Professional Registry (HPR). Under HPR, a healthcare professional ID (HPID) will be created via Aadhaar or other KYC, along with the medical qualifications of the medical professional which is verified by their respective State Medical Councils.

This HPID serves as a unique ID to the medical practitioners to enable connection with all stakeholders of the healthcare ecosystem. “The potential of the mandate is immense. I see three major benefits from this.  First, the availability of a country-wide vetted repository of healthcare practitioners for insurers and TPAs to leverage and build on their network strength.  Second, the enormous reach of Ayushman Bharat Digital Mission,” said Dr Vijay Sankaran, SVP and Chief Medical Officer at MediAssist.

As Ayushman Bharat Digital Mission manages to reach every nook and corner of the country, insurers and TPAs would now be able to empanel verified doctors from far reaching places, he said. “This brings me to the third and foremost benefit. We will now be able to have our cashless OPD network seamlessly spread across both metropolitans and small towns. This is a welcome move and will result in better access to healthcare in the country,” Sankaran said. Health insurance is now the largest segment in the non-life insurance sector with gross premium collection touching Rs 51,361 crore during the seven-month period ended October 2022, a growth of 21 per cent when compared to the previous year.

The Healthcare Professionals Registry will not replace existing registration issued by respective councils. It will, however, bring together data of those professionals from all States participating in ABDM on a digital platform. It will provide additional digital services to the enrolled professionals and will be their primary identifier under the Ayushman Bharat Digital Mission. If professionals wish to avail of these services, they may do so by enrolling in HPR. Further, the processes for registration vary greatly by state, hence a separate enrollment in the Healthcare Professionals Registry is required to capture a standard set of attributes, NHA said.





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Bus driver suffers seizure, loses control of vehicle and rams into auto; 1 dead


A 49-year-old auto-rickshaw driver died after a bus rammed into his vehicle in North Delhi’s Civil Lines. Police said the incident took place Sunday morning when the bus driver, identified as Rajesh Kumar (37), allegedly suffered an epileptic seizure and lost control of the wheel.

Police said Kumar has been arrested and booked for rash driving and causing death by negligence. Police said he was also taken to the hospital after the incident. A PCR call was made by locals around 10.57 am. Staff rushed to the spot and found the auto was badly damaged and the driver was grievously injured.

DCP (North) Sagar Singh Kalsi said: “The bus was coming from Baraf Khana Chowk on the wrong carriageway and hit the auto coming from the ISBT side. The incident took place outside one of the exit gates of Tis Hazari Court. From the enquiry, it was found that the driver had suffered some sort of seizure… an epileptic fit, and he couldn’t control the bus. The bus veered into the wrong carriageway and hit the auto.”

The auto driver, Mamchand (49), was rushed to St Stephen’s Hospital. He was then referred to AIIMS Trauma Centre where he succumbed to injuries. A bus passenger sustained minor injuries and was treated. His statement was recorded by police and a case was registered against Kumar. “We arrested the bus driver and further investigation is being conducted,” said the DCP.





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LIC reports Rs 15,952 crore Q2 profit


Life Insurance Corporation of India (LIC) has reported an unaudited, standalone net profit of Rs 15,952 crore for the quarter ended September 2022 as against Rs 1,433.71 crore in the same period a year ago.

According to a statement filed with the stock exchanges by LIC, change in accounting policy resulted in “transfer of the accretion in the available solvency margin from non-participating (non-par) to shareholders funds amounting to Rs 14,271.80 crore (net of tax) pertaining to the accretion on the available solvency margin from non-par to shareholder’s account”.

As a result, the profit for the quarter and half year ended September 30, 2022 has increased to that extent. “The said amount comprises Rs 5,580.71 crore of quarter ended September 2022, Rs 4,148.77 crore of quarter ended June 2022 and Rs 4,542.30 crore of quarter ended March 31, 2022,” auditors said in the review.

It has made an additional provision of Rs. 11,543.75 crore towards employees retirement benefits due to the wage revision which has become due with effect from August 1, 2022.

The “outstanding unclaimed amounts/ deposits” and “Interest accrued on unclaimed amounts” aggregating to Rs 21,283.14 crore does not match with the “assets pertaining to unclaimed amounts” of Rs 21,749.28 crore, the statement said.

The total income was Rs 222,215 crore for the September quarter as against Rs 186,276 crore a year ago, it said.





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Go Digit: Irdai no to Fairfax proposal for CCPS conversion


Upsetting the plan of Fairfax, owned by Indian origin Canadian billionaire Prem Watsa, to increase its stake in Indian insurance joint venture Go Digit General Insurance, insurance regulator IRDAI has rejected its proposal to convert the company’s holdings in compulsory convertible preferred shares (CCPS) issued by Go Digit Infoworks into equity shares.

Go Digit Infoworks Services, based in Pune, is the parent company of Go Digit Insurance. Fairfax currently owns 45.3 per cent of Go Digit Infoworks, which has an 83 per cent stake in Go Digit General Insurance.

The Fairfax proposal would have increased its stake to 74 per cent from 49 per cent in Go Digit General Insurance, which is engaged in the general insurance business in India. Fairfax is expected to make a gain of approximately $375 million when it achieves majority ownership of Digit.

“In June 2022, Digit Insurance and Fairfax Financial Holdings applied to the IRDAI for approval to convert the company’s holdings in compulsory convertible preferred shares issued by Go Digit Infoworks into equity shares of Go Digit Infoworks,” Fairfax Financial Holdings said in a note.

“The IRDAI subsequently communicated that the application cannot be considered in its current form as conversion of the Digit CCPS would result in Digit (currently classified as an Indian promoter of Digit Insurance) becoming a subsidiary of the company, which is currently prohibited for Indian promoters, notwithstanding that the foreign direct investment rules have been amended to allow foreign investors to own up to 74% in an Indian insurance company,” Fairfax said.

Fairfax said it will pursue its plan to increase its stake in the Indian insurance venture. “Digit, Digit Insurance and the company intend to continue to explore all avenues under applicable law to achieve the company’s majority ownership of Digit through conversion of the company’s Digit CCPS, and the company expects to report a gain of approximately $375 million when it achieves majority ownership of Digit,” it said.

The IRDAI is likely to tighten rules on how a holding company can invest in its Indian insurance subsidiary in the wake of its rejection of Fairfax’s application for converting its holding (Digit CCPS) into equity shares of Go Digit Infoworks. The regulator is likely to stipulate that an insurance company promoted by a special purpose vehicle or a non-operative financial holding company can’t issue convertible instruments of any kind and no stock options or sweat equity can be issued to the employees and directors of SPV or NOFHC.

Market regulator Sebi recently kept in “abeyance” the proposed initial public offering (IPO) of Go Digit General Insurance which filed draft papers for the IPO with the regulator on August 17. The company, which has cricket player Virat Kohli and his wife actor Anushka Sharma as investors, announced plans to raise Rs 1,250 crore through a fresh issue of equity shares and an additional offer for sale (OFS) of 109.4 million shares by a promoter and existing shareholders.

The joint venture partners of Go Digit have applied to the IRDAI for a new license to set up a reinsurance and a life insurance venture. Both Axis Bank and HDFC Bank have already announced their decisions to pick up stakes in the proposed life insurance venture.





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Qatar football World Cup: For many migrant workers, glitter on contract, grime on the ground


Eight-hour work shifts. Two hours of overtime to “meet workload obligations”. Additional payment of 125 per cent for working extra hours on a regular day, and 150 per cent on weekends. Food, transport and accommodation provided by employers, along with a medical card. Twenty-one days of paid leave in the first two years, which would be doubled after that. And, after completing two years, an economy class return air ticket from Doha to the international airport closest to a worker’s hometown in India.

On paper, these are the key terms and benefits listed in a standard contract for a migrant worker availing employment with a company in Qatar, which is hosting the football World Cup next month. The average salary offered is 1200 Qatari riyals, or about Rs 27,000. Most of those who sign up are from rural areas where employment opportunities are limited, and the Government’s job guarantee scheme offers upto 100 days of work in a year with the maximum annual earnings on an average about Rs 21,500.

But Indian workers who have returned from the Gulf state, and the families of those who have died there while working for companies linked to the tournament, say the ground reality is far removed from the glitter on the contract they signed.

For one, they say, their contracts are silent on insurance and compensation in case of death or accident. And that the Gulf country’s opaque labour laws have made it very difficult to make legitimate claims.

This, despite The Supreme Committee for Delivery and Legacy, the Qatari body responsible for organising the World Cup, urging employers at least three years ago to purchase life insurance for workers to ensure their families receive compensation regardless of location or cause of death.

Moreover, workers who have returned from World Cup projects say they were made to toil for long hours in harsh weather conditions, provided unsanitary accommodation, and had to work in unsafe conditions at construction sites.

“After landing there, we submitted our passports to employers. We woke up at 3 am or 4 am every day so we could start work at 5 am, before the temperatures increased. Normally, our work ended around 6 pm. Often, we did not get a chance to take a break. Fridays used to be our day off but the entire day was spent recovering so you couldn’t do anything else,” said Sravan Velmal, who worked for a construction company in Doha along with his father Ramesh. Velmal returned home after Ramesh died in Doha of heart failure.

Workers remove bodies burried under debris at the construction site where Akhilesh Kumar and Surukanti Jagan died

It was over the last decade, after Qatar won the rights to host the World Cup, that the nation emerged as a preferred destination in the middle east for Indian workers. In 2020, Indians comprised 42 per cent of the 17,639 workers of 69 nationalities who worked on projects overseen by the Supreme Committee, according to the panel’s workers’ welfare compliance report. In July, the Ministry of External Affairs submitted in Lok Sabha that of the 1,29,260 Indians who migrated to Gulf countries in 2021, 49,579 went to Qatar — the most among the lot.

A majority of these workers are employed either at World Cup sites or in the service industry that is gearing to cater to millions of visitors during the tournament — from stadiums and highways to marinas.

And for many of them, the journey began with exploitation at the start of the migration cycle. According to Government rules, recruitment agents are allowed to charge up to Rs 30,000, in addition to 18 per cent GST, for their services. Further, the cost of air tickets and visa fees has to be borne by the employers.

No compensation, say families of Indians who died in Qatar working on projects linked to FIFA World Cup.

However, family members of several of the workers who died in Qatar say they paid exorbitant fees to agents, going up to Rs 1.5 lakh. “Hence, workers endure challenging conditions in Qatar just so that they can wipe off their debts. The workers are aware that if they return, there aren’t many employment opportunities back home,” said Velmal.

This migration cycle begins when an employer raises a “demand” by submitting an official request to the Indian embassy in Doha, said Bheem Reddy Mandha, president of the Emigrants Welfare Forum and a member of the Migrant Forum in Asia. Once a demand letter is submitted, enlisting job requirements and employee benefits, the information is uploaded on a Government web portal, setting into motion the recruitment process.

A common pitfall, Mandha said, is workers approach a sub-agent, who charges his own commission, thus inflating costs. “This happens because most agencies that are registered with the Government are in cities like Hyderabad and Mumbai, which are far away from the villages of the workers,” Mandha said.

In normal course, a recruitment drive is held in districts that are identified as catchment areas. In March, The Indian Express visited one of these recruitment drives at Metpally in Telangana’s Jagtial district, where around 200 men were being interviewed for the job of cleaner at buildings to accommodate World Cup visitors.

“When FIFA World Cup-related activities started, the requirement of workers in Qatar increased along with the salaries,” Masula Praveen, a labour agent, said. “Every day we get new requests. Most of these contracts are till the World Cup since there isn’t much requirement after the event is over.”

A key criterion for selection, Praveen said, is the worker’s willingness and ability to work under strict rules. Sometimes, he said, a candidate is made to commit, on video, that he will work for at least six months at a company. “If the person returns to India within six months, the company imposes a fine of up to Rs 50,000 on us,” he said.

Once a candidate is finalised, his passport is submitted to the Protector of Emigrants (PoE) for emigration clearance in India. “Each and every name will be recorded and uploaded on the Government website with all details, including passport copy, photographs and labour contracts. This can be retrieved at any time by the authorities,” Mandha said.

This process was followed in almost all the cases analysed by The Indian Express. However, once in Qatar, the workers are mostly left to fend for themselves.

International human rights watchdogs have accused Qatari authorities of failing to investigate the cause of deaths. In one case, after reaching Qatar, a worker — Rajendra Mandaloji, a carpenter — was presented with a contract that paid about half of what he was promised in salary, his wife Sucharita said. This practice, called ‘Substitution of Contract’, is very common, Mandha said. The stress of a low-paying job and heavy debts took such a toll that, in September 2019, Mandaloji died by suicide.

A majority of workers have died due to reasons described on their death certificates as “natural causes”. “While going, a person is healthy. The doctor certifies he is fit to work,” said Mandha, adding that detailed health check-ups are mandatory for workers before leaving for Qatar. “After going there, people below 40 years old are dying, many from cardiac arrest. The reasons have to be investigated.”





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FM clears 12% salary hike, arrears for PSU general insurance sector


The Finance Ministry has approved a 12 per cent salary hike with five years arrears for the public sector general insurance industry. Finance Minister Nirmala Sitharaman, who had earlier refused to give her final approval to the wage hike proposal unless unions of the PSU insurance companies agree for the “performance linked future wage revision” had changed her mind to approve the proposal, sources said.

The FM’s approval has reached the Department of Financial Services (DFS) for its necessary notification and implementation, industry sources said. PSU general insurance firms have also come out with the new salary structure for various categories of employees after the wage revision.

The government had earlier rejected the demand of unions for a pay parity with Life insurance Corporation (LIC) and ECGC.

However, industry observers have now raised questions about the ability of the three loss making companies (Oriental Insurance Company, United Insurance Company, and National Insurance Company) to bear the burden of higher salaries and arrears of their employees unless the government infuses more funds into these companies. With the 12 per cent hike along with five years of arrears, wage bill for NIC will be around Rs 2,177 crore, Rs 2,080 crore for New India Assurance (NIA), Rs 2,135 crore for OIC and Rs 1,752 crore for UII. There will be a total outgo of Rs 8,146 crore from all four companies for meeting wage revision expenses, analysts said. Analysts said the industry will see a large number of employees, particularly above 50, availing VRS (voluntary Retirement Scheme) after receiving their revised salaries.

The government last year had approved a 16 per cent wage revision with arrears for the employees of IPO-bound LIC and had even finalised a hike of 15 per cent with arrears for the PSU banking industry in 2020.





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Bids invited for IDBI Bank stake sale; Govt, LIC to sell 60.72%


The government on Friday invited expressions of interest (EoIs) for IDBI Bank and offered to sell a total of 60.72 per cent stake in the bank, including major portions of the shares held by the government and state-run Life Insurance Corporation (LIC).

IDBI Bank’s stock closed 0.71 per cent higher on the BSE on Friday. At the current market price, the stake being offloaded is worth Rs 27,800 crore. With the consent of the regulators — the Reserve Bank of India and the Securities and Exchange Board of India — the government has made the mandatory glide path for stake reduction for the buyer more flexible than what is specified for promoters of private banks. The buyer, therefore, would get 15 years to bring down the equity to 26 per cent. Of course, in the first five years, 40 per cent of the equity capital would be locked in, as per the RBI guidelines.

The last date for submission of EoI is December 16. While the Centre is keen to conclude the transaction during the current financial year, it may spill over to the next year, given the formalities to be completed. Banks, non-banking financial companies and private equity funds have already shown interest in IDBI Bank.

The Centre’s disinvestment receipts so far this fiscal year have been Rs 24,544 crore, as against the annual target of Rs 65,000 crore. “A cumulative 60.72 per cent of the shareholding shall be divested. GoI shall divest such number of shares representing 30.48 per cent and LIC of India shall divest such number of shares representing 30.24 per cent of the equity share capital of IDBI Bank, along with transfer of management control in IDBI Bank,” the department of investment and public asset management (Dipam) said in a statement.

Currently, LIC holds 49.24 per cent in IDBI Bank, while the government holds 45.48 per cent. On May 5, 2021, the Cabinet Committee on Economic Affairs had granted in-principle approval for the strategic disinvestment of IDBI Bank along with transfer of management control.

IDBI Bank posted profit after tax of Rs 2,439 crore in FY22.

Its net interest margin stood

at 3.73 per cent and return on equity at 13.60 per cent. The bank’s capital to risk (weighted) assets ratio stands at a comfortable 19.06 per cent.

As per the EoI conditions, private sector banking companies, foreign banks, NBFCs, and alternative investment funds registered with Sebi are among the entities eligible to bid. However, large industrial/ corporate houses and individuals (natural persons) aren’t eligible. FE





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Surrendering a policy: When should you do it — and should you at all?


As the pandemic hit lives, the economy, and livelihoods, 2021-22 witnessed a sharp spike in insurance policies being surrendered ahead of their maturity. Data show that more than 2.3 crore life insurance policies were surrendered during the year — more than three times the number of policies (69.78 lakh) surrendered in 2020-21.

It is ironical that at a time when one is in desperate need of his/ her money, while surrendering a traditional policy (endowment or money back), policyholders in the majority of cases end up with a surrender value that is even lower than the premiums paid.

In case of unit-linked plans, it may result in lower returns on the capital investment. It is, therefore, very important to understand the pitfalls of surrendering, and to evaluate all options before you decide to do so.

What should you look for before surrendering your policy?

The first thing that one needs to check is the surrender value. “Often, people don’t check the surrender value, and assume that the current value of the policy is what they will get if they surrender. It is only later that they realise that what they have received is much less than the current value. So one must check the surrender value before taking the decision,” said Surya Bhatia, founder, AM Unicorn Professional.

Advisers say that policyholders must also evaluate the reason for surrendering the policy, and the various options they can explore with insurance companies. Individuals must look at the reason for surrender — whether they need the money or they think they can’t make future premium payments — and accordingly make their decision.

If one is looking to surrender the policy because they believe they can’t pay future premiums, the policyholder must reconsider.

“After you finish with the minimum period of paying premiums, you have the option to either surrender or stop paying further premiums. Very often this is referred to as paid-up status, where you stop paying the premium and the benefits of your policy reduce proportionately in line with the reduced payment period, Vishal Dhawan, founder, Plan Ahead Wealth Advisors, said.

“So,” he said, “if someone needs to control future cash flows, the individual must explore the paid-up option. Many a time, paid-up options are not looked at by people, and they think that they can either continue or surrender.”

If one is in need of money, one can consider taking a loan against the policy, if the requirement is for a temporary period.

In cases where one is looking to surrender the policy to avoid risk of asset class (volatility in equity markets) in case of Ulips, one has the option to move the money from equity underlying fund to something that is debt-oriented.

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What are the impacts of surrendering a policy?

There are several pitfalls, including losing the insurance cover linked to the policy.

The biggest impact that premature surrendering has is on the return you get out of the policy, as surrender value is much less than what you can get on maturity.

There is no standard answer as to what a surrender value can be — it depends upon the kind of policy (traditional or unit linked), years of premium paid, and term of the policy.

Financial experts say that in case of money-back, endowment, and whole life plans, individuals suffer big losses on account of surrendering the policy and can lose around 50 per cent of the premium paid.

In case of Ulips, since they can’t be surrendered till the fifth year and can only be done at the end of the sixth year, experts say that there is not much loss. However, it does impact the return for the investors because of early termination of the policy.

Another impact is on the aspect of taxation. “People often miss the fact that while the policy is tax-free at maturity, if you surrender ahead of maturity, you miss out on that as it attracts tax at the marginal tax rate applicable to the individual policyholder,” Bhatia said.

Should you surrender your policy at all?

As the drawbacks of surrendering are many, financial advisers suggest that it should be one of the last options. It is advisable that when in need of money, investors should carefully look at their entire investment corpus — mutual funds, insurance policy, fixed deposits, bonds, etc. — and after understanding the implications of giving up each of them, they should figure out which one should go first, and which should be taken up last.

“When you explore all the options and take a measured approach, you will end up taking a better decision, Dhawan said. He added that “while one can still do it with investment policies, it is crucial that one doesn’t do it with term policies”.

Bhatia said that surrendering a policy should be the last resort. “Explore other options. Only in the case of Ulip plans, if the policy is not working according to the plan, you may look to surrender — but that too to reinvest in a better performing policy or other financial instrument,” he said.





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