Feb 25, 2016, 05.08 AM IST
The Life Insurance Corporation of India (LIC), which controls close to 70% of the life insurance market, has introduced the third gender
as an option in its proposal forms in line with Supreme Court 2014
verdict recognising it. Till now, policy buyers could choose between
'male' and 'female' as gender options. Now transgender applicants can
opt for the 'third gender' category.
The move is
significant given LIC's market dominance that drives trends in the
sector. Though the National Pension System also recognises the third
gender, other insurance companies and mutual funds do not seek this
information. The know-your-customer (KYC) process, a prerequisite for
making investments or opening bank accounts, also does not accommodate
the third gender as an option. Incidentally, the option was included in
Indian passports more than 10 years ago in 2005.
"The
honourable Supreme Court, in a landmark judgement lauded by human rights
groups, called on the government to ensure their (third gender) equal
treatment. We have taken up the advice for implementation," said SK Roy,
chairman, LIC. The Insurance Regulatory and Development Authority of
India (IRDAI) has approved the new proposal form.
For most insurance companies, introducing the option may be a trifle difficult. LIC does not have differential premiums based on gender. But other companies have lower premiums for females
because of their longer life expectancy. These companies will have to
grapple with the issue of pricing premiums for the third gender.
Though
LIC's premium tables for all three genders are uniform, it has put in
place an additional layer of underwriting for insurance applications
from the transgender community.
"All third gender cases are
referred to the central office and the risk factor is assessed on a case
to case basis. The cases are underwritten with medical reports only,"
said an LIC spokesperson.
The decision to provide the
third option is in line with the April 2014 Supreme Court ruling
recognising the transgender community as the third gender.
"The
move is also a reflection of the changes in the society and income
profile of the transgender community. Over the years, their sources of
livelihood have broadened, boosting their income, which is one of the
key considerations for buying life insurance," said financial planner
and LIC agent Poonam Rungta.
While hailing it as a
"welcome" development, Pallav Patankar, director of programmes at the
Humsafar Trust, said the utility value of life insurance for the
transgender community is limited. "It is a step in right direction, but
at present, members of the community do not look at insurance as a
viable instrument," he said.
"Being an illiquid
instrument, it may not serve the needs of the Hijra community, for
instance, as they deal heavily in cash. Very few have even a bank
account in the first place."
Providing proof of income,
too, can be a challenge, as is identifying insurable interest, which is
the core principle of life insurance. The absence of legal sanctity and
policy framework means that members of the LGBT (lesbian, gay, bisexual,
transgender) community find it difficult to transfer not only insurance
benefits, but also property or other assets to their partners.
"For
instance, in case of Hijras, who will get the insurance proceeds--the
gurus, chelas or the biological family? There are no official documents
to define the relationships. An insurance policy will make sense only in
the context of an enabling legal framework," he added.
