Life Insurance: More customer-friendly products in the offing

For all linked and non-linked products, the insurer will follow the extant ‘File and Use’ procedure for filing new or modified products/riders.

In order to make life insurance products more customer-friendly, the insurance regulator has introduced changes in filing new or modified products and procedures for modifications of the existing products. For all linked and non-linked products, the insurer will follow the extant ‘File and Use’ procedure for filing new or modified products/riders.

For products and riders which fully comply with extant norms and regulations, the regulator will endeavour to clear the ‘File and Use’ applications within one month from the date of receipt. In case the information in the ‘File and Use’ application and other documents is incomplete or incorrect, the product rider will be closed and will be returned to the insurer.

Modification of existing products

Insurance companies will have to examine and ensure that all the existing products on sale are compliant with the Insurance Regulatory and Development Authority (Irdai’s) Product Regulations 2019. For all existing products and riders which comply with the regulations, a certificate signed by the appointed actuary and countersigned by the chief executive officer will have to be submitted to the authority. In case of modification carried out, the insurance company will file the modified ‘File and Use’ documents for these products. In case there are any modifications which are not covered under ‘Use and File’ procedure, such modifications may be carried out in a specified format.

All existing products and riders not in conformity with the Irdai’s Product Regulations will have to be withdrawn on or before November 30, 2019. A certificate, comprising the list of such products/riders withdrawn from the market, will have to be submitted to the regulator before November 30.The circular says that once a product/rider is withdrawn from the market, the insurer will not procure any new business or issue any new policy under the product/rider after the date of withdrawl. In case of products which are already filed with the regulator but not approved as on July 26, the files will be returned for filing afresh in conformity with the regulator’s product regulations.

Group products

If a group product or rider is withdrawn, no new members can be added into the existing group. However, all group policyholders at the time of renewal of such policy shall be given an option to switch over to the modified version of the group product/rider, once introduced. Those group policies where the policyholders do not switch over to the modified version will continue to be renewed under the old group product/ rider.

The insurer will have to obtain written consent from the group policyholders to continue in the old policy. A certificate in respect of the group products/ riders which have been withdrawn from the market for new business on account of non-compliance with the regulator’s product regulations.

Customer-friendly steps

Life insurance products are undergoing major changes as recently, the regulator has revised the surrender and annuity norms in both linked and non-linked life insurance products. The minimum death benefit, revival period and norms of pension products have also been revised to make them more customer-friendly.

For all non-linked life insurance products, or traditional products, the minimum sum assured on death during the entire term of the policy will not be less than seven times the annualised premium in case of a regular policy. In case of linked products, the death benefit will be the sum assured as agreed in the policy plus the balance in the unit funds. The sum assured in case of a single premium policy will be 125% of single premium; in case of regular premium policies, it will be seven times the annualised premium. In case of death due to suicide within 12 months from commencement or revival of the policy, the beneficiary will be entitled to the fund value as on the date of intimation of death.


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