Bank of Russia enhances consumer value of ILI and ELI policies
Insurance companies will no longer be entitled to refuse to pay income to customers under investment life insurance (ILI) and endowment life insurance (ELI) contracts on the grounds of the sanctions blocking payments from foreign counterparties. These and other requirements stipulated by an ordinance of the Bank of Russia will become effective from 1 April 2024 and apply to new contracts.
The ordinance specifies that the minimum insurance coverage under ILI and ELI to be paid to the insured at the end of the endowment period is to be calculated taking into account the age of the insured, the term of the insurance policy, and will also depend on the Bank of Russia key rate at the time the insurance contract is signed. As before, the insurance coverage for the longevity risk cannot be less than the total insurance premiums of the policyholder. Thanks to this, many customers will receive larger insurance payments. The requirement concerning the insurance coverage does not apply to policies with a premium of ₽1.5 million and more or to insurance contracts with payment in instalments over five years or more.
A maximum period for payment to customers is introduced: 30 days from the receipt of a customer’s application.
In 2023, more than 1.1 million individuals purchased ILI and ELI policies. According to Bank of Russia statistical data, individuals live to the end of the endowment period in more than 80% of all cases.