The Securities and Exchange Commission of Pakistan (SECP) has set three growth rate scenarios for life insurance and Family Takaful products at 7 percent, 9 percent and 11 percent for 2015 onwards for projected benefits to potential policyholders. According to circular number 1 of 2015 issued here on Friday, life insurance & Family Takaful products illustration is an integral part of the overall process.
It helps in enhancing transparency, provides better understanding of the product to prospective policyholder and enables them to make informed decisions along with comparisons between various life insurance and Family Takaful products. Life insurance and Family Takaful companies use three growth rate scenarios to demonstrate projected benefits to potential policyholders. The SECP specifies these scenarios based on long-term interest rate outlook prevalent in Pakistan.
The SECP has decided that, for the year 2015, there should be no change in the three scenarios for the rates of return assumption as specified for the year 2014 through Circular No 1/2014 dated January 07, 2014. Accordingly, the growth rates scenarios for Life insurance and Family Takaful illustration will remain at 7 percent, 9 percent and 11 percent for the year 2015 and onwards, it added. The growth rate scenarios for life insurance and Family Takaful products were 7 percent, 9 percent and 11 percent for 2014.