Now buy a term insurance plan using OTP – Check IRDAI’s new rule

This new rule is to be allowed on an experimental basis with immediate effect till 31st December 2020 and is limited to pure risk products.

Buying a term insurance plan has become much easier now. While buying term plans online is already possible from the website of life insurers, one can also buy life coverage from insurance agents and intermediaries such as banks, corporate agents etc. But, if moving out and having physical interaction with agents is proving difficult in these times of pandemic, the insurance regulator IRDAI has come up with a solution. Now, one can buy a term insurance plan from his friendly neighbourhood insurance agent sitting at home. The filling up of the application form, submission of documents and even the signing of the forms is now possible through OTP received on your mobile. The Insurance Regulatory and Development Authority of India (IRDAI) has dispensed with physical signatures on proposal forms.

This new rule is to be allowed on an experimental basis with immediate effect till 31st December 2020 and is limited to pure risk products, i.e., products that do not involve any savings element. This means the rule will be applicable only while purchasing term insurance plans.

The IRDAI in one of its latest circular states that it is in receipt of feedback from various life insurers that the situation arising in the wake of COVID-19 outbreak has impacted the traditional manner of canvassing life insurance policies by agents and intermediaries.

In particular, the filling-in of the physical proposal forms, obtaining wet signatures on them and subsequent movement of such physical papers, etc., are severely affected.

In this backdrop, the life insurers had represented to the Authority to allow the option of authenticating the proposals for life insurance through electronic means, in place of a physical signature, for the sales made by insurance agents and intermediaries, in addition to the methods presently allowed.

After examining the suggestions received from life insurers, the IRDAI has issued the following instructions:

Life Insurers are allowed to obtain the customer’s consent without requiring a wet signature on the hard copy of the proposal form, for the business solicited by insurance agents/intermediaries subject to the following:

a. The completed proposal form shall be sent to the prospect on his/ her registered e-mail ID or mobile number in the form of an e-mail or a message with a link as the case may be.

b. The prospect, if he/she wishes to consent to the proposal, may do so by clicking the confirmation link or by validating the OTP shared. The Insurer shall maintain verifiable, legally valid evidence for the proposer’s consent received for the fully completed proposal form. Further, the insurer shall not accept any payment of money towards proposal deposit till the receipt of the consent of the proposer.