The Insurance Regulatory and Development Authority of India (IRDAI) has directed life insurance companies not to withhold or delay payment of claims when the policyholder or claimant expresses unwillingness or has objections to execute the advance discharge voucher or to accept the amount.
In a circular issued on Wednesday, IRDAI has said in such instances of dispute, the life insurer should not insist on the discharge voucher or make it conditional for releasing the policy payment.
When executed, discharge vouchers indicate that a claim has been resolved between the insurer and the insured. It indicates that insurer’s contractual liability is extinguished.
IRDAI has, however, said life insurers may call for advance discharge vouchers in normal course at the time of making policy payments including free-look cancellation. “The discharge voucher sent to policyholder/claimant should necessarily contain policy number and the nature of payment and amount of claim under different heads including deductions and other relevant details,” the insurance regulator has said.
It has pointed out that life insurers discharge contractual obligations when making policy payments, be it maturity or death claims or surrender value. Contracts of life insurance are not indemnity contracts but fixed benefit type and the claim amount is usually not in dispute.
It is a standard practice to call for an advance discharge voucher-cum-receipt duly signed by the policyholder or claimant as the case may be. Discharge vouchers also serve as useful information to the policyholder/claimant about the amount payable under the policy as per policy terms and conditions.