In plain-vanilla life insurance policies each and every benefit is predefined and disclosed upfront at the time of sale itself and is very simple to understand
At a time when life insurance penetration—ratio of premium to GDP—has dropped to 2.76% in 2017 from 4.6% in 2009, the insurance regulator has issued a master circular for point of sales products and persons for life insurance. (POSP-LI). The products will be plain vanilla life insurance policies where each benefit is predefined and disclosed upfront at the time of sale itself and is easy to understand.
An insurance company or an insurance intermediary authorised to solicit and market insurance products can engage a POSP-LI. The category of products that will be offered by POS-Life will be pure term insurance products with or without return of premium. They can sell non-linked non-participating endowment product, immediate annuity products and non-linked non-par health insurance products with fixed benefits. The premium paying term under POS-life product will always be equal to policy term. The death and maturity benefits including return of premium will be paid only in one lumpsum.
Key features document
There would be two parts in the key features document (KFD) cum proposal form, where the first part would be the KFD and second part would be the proposal form. Both the parts will be joined by perforation so that the first part can be easily separated and given to the life assured for his record and the second part, which is the proposal form, will be kept by the insurance firm.
The KFD document must contain all the key benefits under the plan including the sum assured on death, maturity benefit, surrender value, paid up value, exclusions, registered name and address of the life insurer. In online mode, an explicit and exclusive consent will be taken for KFD in a screen and a copy of such KFD has to be mailed to the proposer.
The turnaround time for issuance of policy/acceptance of risk will have to be communicated within four days from the date of collection of proposal form. If the proposal is not accepted for any reason, the refund of payment will have to be done to the proposer within seven days. The proofs of identity acceptable for POSP Life are PAN card and Aadhaar.
Training of POSP-LI
A life insurance company or a life insurance intermediary proposing to engage as POSP-LI will have to conduct in-house training of 15 hours for the candidate, conduct an examination and issue certificate to successful candidates. The POSP-LI is allowed to distribute micro insurance products of life insurers and the commission payable will be applicable to the individual agents as approved under the micro insurance product. Every proposal form— both paper and paperless, insurance policy and other related document will carry provision to record the POS code in order to tag the policy to the POSP-LI who is selling the said policy.
The life insurer will be responsible to record the POS code in the proposal form and insurance policy. The insurer will also be responsible for the conduct of the POSP-LI representing him and any misconduct on the part of the POSP will make the life insurer liable to penalty.
The life insurers and insurance intermediaries will make suitable provisions in their policy administration system to capture the identity proof details submitted by POS persons attached to POS code. If POS persons are authorised to collect and remit the premium, they will have to issue acknowledgement on collection of premiums and every insurer will put in place procedures to enable this.