Plugging gaps

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SummaryIrda’s clarifications to its March guidelines will bring transparency in non-linked policies where a significant amount of misselling takes place

After coming out with the final guidelines on linked and non-linked products in March this year, the insurance regulator has now issued some clarifications.

The minimum death benefit, in case of non-participating products for people below 45 years, during the entire term of single-premium products where the policy term is more than five years but less than 10 years, will be highest of five times the annualised premium or 105% of all the premiums paid as on date of death or the minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

In the earlier gazette notification, it was mandated as the highest of 10 times the annualised premium or 105% of all the premiums paid as on date of death. Even in participating products for people below 45 years, the minimum death benefit has been reduced to five times the annualised premium or the minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Similarly, in non-participating products for people above 45 years, the minimum death benefit will be the highest of five times the annualised premium or 105% of all the premium paid as on date of death or the minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death. In case of participating products, the death benefit will be the highest of five times the annualised premium or the minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

In case of suicide within 12 months of taking the policy, the nominee or beneficiaries of the policyholder will be entitled to at least 80% of the premiums paid, provided the policy is in force. Also, for policies issued on minor life, the date of commencement of risk may start anytime within two years.

The provision of a minimum sum assured on death will not be applicable to reduced paid-up policies, pension products, all types of immediate annuity products and decreasing cover term insurance products. However, for all individual pension products, the minimum benefit payable on death will not be less than 105% of all premiums paid as on death.

In case of group credit insurance products and group term insurance products with other than single premium payment products, the policy term will not be less than five years.

Except for one-year renewable

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