Life insurers have supported the customer-friendly changes in the products
The new life insurance product regulations will be implemented from FY19 onwards. The rules that are still at a draft stage will be finalised in the IRDAI board meeting scheduled at the end of April 2019. Sources said life insurers have already submitted their responses to the regulator and have mostly welcomed the changes.
"The regulations are in the right direction. We are only hoping that we get adequate time to refile old products so that customers have the choice and business is not impacted," said the head of a mid-sized private life insurer.
In the draft norms in October 2018, the Insurance Regulatory and Development Authority of India (IRDAI) had said life insurance companies will be able to offer flexible policy tenures for certain products. IRDAI also said insurers can design term, credit life and micro-insurance products that have a range of policy tenures to choose from.
IRDAI had constituted a committee for reviewing the product regulations in the life insurance sector. Based on the report and comments from stakeholders, the regulator has brought out the draft regulations.
For non-linked insurance products, the revival period has been extended to five years from the current two years. Here, non-linked policies to acquire guaranteed surrender value after two years.
In unit-linked insurance products, after payment of premiums for the first five completed policy years, the policyholder may be given an option to decrease the premium by a maximum of 50 percent. Once the premiums are reduced, they cannot be increased subsequently.
In the pension product category, IRDAI has given the option for partial withdrawal for those linked to the equity markets. Also, when it comes to buying an annuity at the end of a pension product’s policy term, the policyholder has an option to choose from an open market. Currently, they are limited to buying an annuity product from the same insurer.
