The circular issued by IRDAI on February 18 states that the new system allows policy holders to block funds in their bank accounts for premium payment. The insurance regulator said that the new system will enhance convenience and reduce payment delays.
The Insurance Regulatory and Development Authority of India (IRDAI) has introduced a new system to simplify the premium payment for life and health insurance policies. Now you will not have to face any problems in making premium payments for life and health insurance. This is a system that will first block the premium money in your account. After that, the money will be deducted automatically when the policy is accepted.
The circular issued by IRDAI on February 18 said that the new system allows policy holders to block funds in their bank accounts for premium payment. The insurance regulator said that the new system will enhance convenience and reduce payment delays. This system will come into effect from March 1.
How does Insurance-ASBA work?
Insurance-ASBA enables policy holders to block a certain amount in their bank accounts through UPI before the insurance proposal is accepted by insurance companies. The amount is debited only after the policy is accepted and if rejected, the amount is automatically unblocked within one working day.
Insurance-ASBA Features
The funds will remain in the policyholder’s account until the insurer accepts or rejects the policy. Under this system, the money is deducted only after the policy is issued. If the policy is not accepted, the refund is automatically made. The maximum block time is 14 days or till the underwriting is completed. After this, the money is deducted from the account upon acceptance.
How to block funds in bank account for premium payment?
Opt for Insurance-ASBA: While applying for an insurance policy, fill a form which will include an option to allow the bank to block the premium amount in your account.
Blocking funds via UPI: The insurance company sends a request to your bank (through its partner bank) to block the required amount in your account.
Approval and blocking funds: The bank takes the customer’s approval and blocks the amount. Once the policy is accepted, the insurer requests the bank to debit the blocked funds. If the policy is rejected or cancelled, the amount is refunded without any deduction.
