The Insurance Regulatory and Development Authority of India (IRDAI), in its latest guidelines, has taken several customer-centric measures that will immensely benefit the policyholder of life insurance companies.
The Insurance Regulatory and Development Authority of India (IRDAI), in its latest guidelines, has taken several customer-centric measures that will immensely benefit the policyholder of life insurance companies. The welcome steps taken by IRDAI in the new product regulations, which have already been gazetted, have made the policyholders delighted.
Giving relief to the customers, the insurance regulator has increased the revival period from 2 years to 3 years for market-linked (ULIP) plans and from 2 years to 5 years for non-linked (NL) plans. This will give policyholders more time to revive their lapsed policies.
Policyholders may now pay the premiums for one or more policies in a single visit to the insurance company from which the policies are taken, as the time period for advance collection of premium has been increased up to 1 year 3 months. So, premiums for the policies, which become due in a financial year (FY) may be paid together anytime during the FY. Moreover, even if premium of a policy will become due in the next FY, the premium may be paid 3 months before the due date in the current FY.
So, for example, premium due on March 30, 2020 can be paid on April 1, 2019 and of course any time thereafter. Likewise, premiums due up to June 31 of the next FY, may be paid on March 31. Similarly, premium due on April 1, may be paid any day after January 1.
In another significant move to benefit holders of pension plans, IRDAI has increased the amount that may be commuted from the pension corpus from up to 1/3rd to up to 60 per cent of the value of the corpus, as it allowed in NPS. The remaining 40 per cent of the pension corpus may be used to buy annuity plans and half of which may be taken from any other insurance company, unlike the earlier rule, under which, it was necessary to take the entire annuity from the same insurer.
The most important move of the IRDAI is to change the earlier regulation, under which, it was not necessary for the insurance companies to pay back any money, if a policy was surrendered within the first 2 years from the date of commencement of the policy. Under the new product regulations, insurance companies will have to pay a minimum Surrender Value (SV), as listed by the regulator, even after premium of just one year is paid. Along with changing the time frame, the regulator has also increased the amount of minimum Guaranteed Surrender Value (GSV).
“These are all welcome reforms introduced by IRDAI. These will have a positive effect on insurance market,” said an official of the Life Insurance Corporation (LIC) of India.