Latest Guidelines and Rules of Irda for the Insurance Sector
Over the last few years, remarkable growth is witnessed by the insurance industry. The root cause behind this surge is the sense of realisation of the significance of the insurance plans among people in the wake of witnessing the soaring medical prices, securing family, vehicle accident and so on. The enhancement of the wastage of hard-earned money compelled the individuals to opt for an insurance plan for gaining proper security while keeping their savings intact.
Insurers aren’t mere responsible to offer insurance plans but to deliver claims duly and timely, whenever requested. The insurance holding customers seldom complain regarding denial of their claims of unnatural grounds. Over the years, this sort of grievance has increased. Hence, Insurance Regulatory and Development Authority (IRDA) of India in our country, apparently decided to mull over for coming up with some revised and standardised guidelines, procedures and rules related to different types of insurance plans to assist people in getting more successful claims and enhance the convenience of insurance holders.
Revised rules and guidelines to standardise Health Insurance Industry by IRDA
To prevent the ambiguity and misunderstandings arising out from insurance policies, the regulatory body, i.e., IRDA has decided to redefine their guidelines to standardise the insurance practices. It has laid some rules which are required to be used as a mandatory clause in the documentation of each health insurance . Here are some changes and their benefits of the Drafted Proposals of IRDA Regulation 2018:
1. The Minimum Death Benefit has changed to 7 times for Regular Premium Products and 1.5 times for Single Premium Products for all age groups
Currently, the minimum death benefit is given 10 times to people with less than 45 years, while for 45+ years, it is 7 times. But, the revised proposals have reduced it to 7 times from 10 times for Regular Premium Products and 1.5 times for Single Premium Products. The major reason for this change is to encourage policyholders to invest this amount in the markets, which in turn will assist in generating higher corpus rather than getting deducted for the mortality charges.
2. The Non-Linked Policies to attain surrender value after 2 years
Earlier the surrender value was allowed to be opted for over 3 years of policy in force, which is now reduced to 2 years for helping customers make quick investment change decisions. However, the amount can be withdrawn after holding it for 2 years.
3. The revival period is extended to 5 years in respect of Non-Linked Policies
The restoration period of the discontinued policy with all the benefits covered is made unavailable after 2 years if the policy is discontinued due to the non-payment of the premium for two years. But now it has been increased to 5 years. If the policyholder is financially sound, they now get 5 years to revive the policy.
4. The option of computation up to 60% pension is allowed in respect of pension products
Presently one can withdraw 1/3rd as the lump sum amount and 2/3rd of the amount is annuitised. But now one can withdraw up to 60% amount only of the corpus. This is a good alternation for policyholders as it will provide more flexibility and this will make the policy at par with the National Pension Scheme.
5. For Linked pension products, a facility for partial withdrawal is allowed
Now the policyholders can partially withdraw the lump sum amount from their linked pension products., which was not allowed earlier.
6. Open market options are allowed in respect of annuities
Now the IRDA has opened the annuity products to all Health insurance companies. On the other hand, policyholders had to purchase annuity only from the pension product provider.
7. The settlement option period is increased to 10 years or the original policy term, whichever is lower.
The period of settlement which is given to the policyholders for getting the maturity or death is 5 years. It has now been increased to 10 years from the date of maturity or the original policy term, whichever falls lower. Hence, the proposer will have more years for a settlement.
8. Switches are allowed during the settlement period
Switches during the period of the settlement were not allowed earlier, which after the IRDA’s proposal is set to be allowed. It will assist the customers of Unit Linked policies managing their funds better in a volatile market.
9. Insurers are now allowed to design individual term, group term, credit, and micro-insurance products
The policyholders can design individual term, group term, and micro and credit insurance products which will provide many benefits to the policyholders.
10. Group products governed by provisions are modified
IRDA has introduced provisions for governing group products which are allowed to allow a wider range of products based on consumer demands.
11. Linked Variable Products is removed as Linked Product Structure
The linked variable products are eliminated as a linked product structure to address the needs of the policyholders in a better manner. It is done to provide more flexibility and transparency by providing an opportunity to invest in these insurance plans.
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It is considered that these changes will bring positive changes in the insurance industry and deliver ease and benefits to policyholders.
