Prices Increasing soon Prices Increasing Soon

Insurance Regulatory and Development Authority Lets Insurance Providers to Hedge Interest Rate Risks

Participation in interest rate derivatives would aid such companies by shielding their return from fluctuation in the interest rates and would also protect financial health. IRDA recently gained recognition by allowing insurance companies to hedge their interest risks by participating in interest rate derivatives of a longer tenure.

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
6.7 Crore
Registered Consumers
Insurance Partners
3.4 Crore
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:-

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

According to the present norms, insurance providers are permitted to enter Forward Rate Agreements (FRAs),Interest Rate Swaps (IRS) and Exchange Traded Interest Rate Futures (IRF) with a maximum tenure of one year.

Participation in interest rate derivatives would aid such companies by shielding their return from fluctuation in the interest rates and would also protect financial health.

All insurers are welcoming this move. It is going to help insurance companies in hedging their long-term interest rate risks.

Several products of insurance companies offer guaranteed return. However, because of fluctuation in the interest rates, returns can slump. This can put pressure on the finances companies.

Companies get into these agreements to hedge the interest rate risk on investments and the forecast transactions. Hedging interest rate risk of investment in fixed income securities would include fixed income derivative positions that are designed to negate the potential losses from present fixed income investments of them

After putting conditions, the guidelines said, a participant's dealings in interest rate derivatives would not go beyond an outstanding notional principal amount equivalent to 100 per cent of the book value of the fixed income investments of the insurance company under the policyholders fund, it said.

ULIP funds in case of life insurers and the shareholders funds taken together would be excluded.

The mark-to market gain or loss arising out of the effective hedge would be solely taken care of by the respective fund only.

There won't be entry of any contracts with promoter group entities either directly or indirectly.

The guidelines are quite comprehensive and there is a good amount of checks and balances so that insurance companies do not run into the risk of overexposure of such instruments.

The guidelines stated that the board would make sure that the Rupee Interest Rate Derivatives are good enough for the portfolio handled by the insurer and the liabilities undertaken.

Requirement is felt to establish risk measurement methodologies which are consistent with the nature and scale of the derivatives activities.

The initiation of the policy is the responsibility of the investment committee with an oversight by the board of directors.

While handling such potentially complicated products the board and the senior management of insurance company should understand the nature of the risk undertaken, complexities involved, stress levels etc.

To lessen the risk, contracts have to be verified at regular intervals at least once in a year.

Different types of Plans

Premium By Age

Life insurance articles

  • Recent Article
  • Popular Articles
09 Aug 2023

What High Net Worth Individuals (HNIs) Do To Secure Their...

High net worth individuals often opt for life insurance plans to

Read more
28 Jun 2023

A Review Of ICICI Prudential Life Insurance

“Policy Bazaar insurance clarified the term policy for me, so

Read more
27 Jun 2023

A Review Of HDFC Life Insurance

“I recently bought an HDFC term plan and it is the best

Read more
20 Jun 2023

Best Life Insurance Policy in India with High Returns

The best life insurance policy in India is a type of life

Read more
20 Jun 2023

Which Insurance is Best in India?

Insurance is a financial product that transfers the risk to a

Read more
27 May 2014

How to Check LIC Policy Status, Details, Statement via...

Last year, Mr. Rajiv Verma bought a Child LIC policy to provide financial security for his kid's future. However

Read more
25 Feb 2022

SBI Life Insurance 50,000 per year Plan for 5 Years

Life insurance is about the financial protection of the family and working for life’s milestones through smart

Read more
23 Mar 2022

SBI Life Insurance Policy Surrender Value Calculator

SBI life insurance policy surrender value calculator is an online tool that helps users calculate the amount they

Read more
09 Mar 2022

PLI Surrender Value Calculator

PLI Surrender Value Calculators have proven to be one of the simple tools for digitally savvy customers. PLI

Read more
View Plans
Download the Policybazaar app
to manage all your insurance needs.