Life insurance companies have got big relief from IRDAI on surrender value. Now under the new rules, the surrender value will be decided by the policy surrender period. That means, the longer the policy surrender period, the higher the surrender value.
Insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) has given big news for the companies and customers of the insurance sector. Life insurance companies have got a big relief from IRDAI on surrender value. Now under the new rules, the policy surrender value will be decided by the policy surrender period.
That means, the longer the policy surrender period, the higher the surrender value. These new rules are going to come into effect from April 1, 2024. Insurance regulator IRDA has notified many rules. This also includes the charges associated with returning or surrendering the insurance policy. In this, insurance companies have to disclose such charges in advance.
What will change with the new rules of IRDAI?
This new rule will stipulate that if the policy is surrendered or returned within three years of purchase, the surrender value is likely to be the same or even lower. It says that policies which are surrendered in the fourth to seventh year may see a slight increase in their surrender value.
Surrender value in insurance means the amount paid by insurance companies to the policyholder for terminating the policy before its maturity. If the policyholder ‘surrenders’ during the policy term, the earnings and savings portion are paid to him.
What will be the surrender value on Non-Single Premium?
If the policy is surrendered in the second year, you will get 30% of the total premium paid.
If the policy is surrendered in the third year, you will get 35% of the total premium paid.
If the policy is surrendered in the fourth to seventh year, then 50% of the total premium paid will be received.
If the policy is surrendered before 2 years of completion, then 90% of the total premium paid will be received.
What will be the surrender value on Single Premium?
- If the policy is surrendered in the third year, then 75% of the total premium paid will be received.
- If the policy is surrendered in the fourth year, then 90% of the total premium paid will be received.
- If the policy is surrendered before 2 years of completion, then 90% of the total premium paid will be received. will get.
What is positive for life insurance customers?
- There is no significant change in the new surrender value for policies up to 3 years.
Most policies surrender after 3 years. - There is a slight increase in the surrender value between the fourth and seventh years.
Most policies are not surrenderable after the seventh year.
Let us tell you that IRDAI has approved 8 principle based regulations. This amendment will be important for regulatory governance. A total of 34 regulations have been changed by 6 regulations. Along with this, two new regulations have also been brought. Under the IRDA (Insurance Products) Regulations, 2024, six regulations have been combined into a unified framework.
Its objective is to enable insurance companies to respond quickly to emerging market demands, improve ease of doing business and promote insurance. The Insurance Regulatory and Development Authority of India (IRDAI) said in a statement that these rules promote better practices in product design and pricing.
This includes strengthening the rules related to guaranteed value on policy return and special return value. It also ensures that insurers adopt concrete activities for effective monitoring and due diligence.
