Insurance Policy: There is a big update for those buying insurance products. Insurance regulator IRDA recently notified 8 new rules. Under this, the fee to be charged on surrendering the policy will have to be declared in advance.
There is big news for those buying insurance. Now the insured will not get much money on surrendering the policy. The companies opposed the proposal of the Insurance Regulator of India (IRDA), due to which the regulator had to implement the old rule. However, the regulator has said that insurance companies will have to disclose such charges in advance. The regulator has notified many rules related to the insurance sector.
IRDA has merged six rules into a unified framework under the Insurance Products Regulation, 2024. Its objective is to enable insurance companies to respond quickly to emerging market demands, improve ease of doing business and promote insurance.
What is in the new rule
The Insurance Regulatory and Development Authority of India (IRDAI) said in its statement that these rules promote better functioning 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.
Will be implemented from 1st April
These rules will come into effect from April 1, 2024. These stipulate that if the policy is returned or refunded within three years of purchase, 30 percent of the premium will be paid to the customer. For policies that are refunded from the fourth to the seventh year, the refund value will be limited to 50 percent of the total premium.
Return value in insurance refers to the amount paid by insurance companies to the policyholder if he terminates the policy before its maturity date. If the policyholder ‘surrenders’ during the policy term, a fixed amount is paid to him. Earlier, IRDAI had changed the payment rules, in which it was proposed to give more amount on surrender of the policy.
34 rules combined to make 8
IRDAI, in its meeting held on March 19, approved eight principle-based unified rules after a comprehensive review of the regulatory framework for the insurance sector. These rules cover aspects such as protection of policyholders’ interests, rural and social sector responsibilities,
electronic insurance markets, insurance products and operation of overseas reinsurance branches as well as registration, assessment of insurance risks and premiums, finance, investment and company governance. Important areas are covered. IRDAI said in the statement, ‘This is an important step, in which 34 rules have been replaced with six rules. Along with this, two new rules have also been brought for clarity in the regulatory scenario.
