The Regulatory and Development Authority of India (IRDAI) has unveiled new measures that permit additional choices and benefits for policyholders holding withdrawn life insurance offerings that are closed for new business.
The latest circular will come into immediate effect and is applicable to offerings that are not sold currently but still have active policies on the books of insurers.
The directive is aimed at offering current policyholders improved choices or benefits, as well as greater flexibility while guaranteeing that their benefits are not badly impacted.
Following consultation with the Life Insurance Council, the regulator permitted various options for withdrawn life insurance products.
The newly announced benefits are adding current riders that are open for sale, flexible premium payment options, reduced interest rates for reviving policies or policy loans and more options for payments.
The regulator also laid out various conditions for insurers while providing these benefits.
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As per the release, insurers should guarantee that the withdrawn applications are not modified, and policyholders should be updated on the newly available provisions to aid them in adopting well-informed decisions.
The regulator also noted that the modifications as per the new circular should be properly recorded in the policy document.
Additionally, the insurers should also guarantee that the rider’s term does not exceed the base policy’s outstanding policy term.
The regulator said: “With this initiative, IRDAI reaffirms its dedication to policyholders by offering greater flexibility and enhancing policyholders’ insurance experiences.”
IRDAI established a five-member expert panel to advise it on matters related to mental health and insurance in May 2023.