It has also asked the insurers to put in place a board approved policy with respect to insurance products for people living with HIV/AIDS (PLHA).
"With respect to persons who are HIV negative at date of commencement of the contract and subsequently found to be HIV positive during the term of the policy, the insurers shall not reject/deny any claim, on such grounds.
"In all such cases, the underwriting guidelines and claims settlement guidelines applicable at the time of commencement shall be applicable," IRDA said in a circular.
Insurance Regulatory and Development Authority (IRDA) said insurers may offer products to such people with designs such as PLHA as one of the critical illness, providing a lump sum on becoming HIV positive or conversion of lump sum amount into annuity for life in the event of insured becoming HIV positive during the term of contract.
They may also design the product providing health cover on benefit basis, excluding only the treatment of HIV/AIDS, it added.
The regulator said that in all such cases, the underwriting guidelines and claims settlement guidelines applicable at the time of commencement shall be applicable.
"Renew the cover based on the company's board approved underwriting policy for PLHA," it added further.
IRDA said that the circular will come into effect from April 1, 2014.
"All the insurers shall put in place the board approved underwriting manual, claims manual, proposal form and all the other necessary systems before this date," it said.