Irdai issues draft guidelines for life insurance products
The Insurance Regulatory and Development Authority of India (Irdai) on Friday notified new draft product guidelines for linked and non-linked life insurance policies. One of the significant changes brought under these draft guidelines is increasing the minimum death benefit to seven times for regular premium products and to 1.25 times for single premium products for all ages.
"There were significant changes in the trends in product structures driven by customers’ needs, wants and preferences... Apart from this, innovations in the methods of placing the products in the market, coupled with innovations in product benefits and structures is the main driving force which necessitated review of the existing product regulations," the notification said. The move, the insurance regulator said, was also due to the fact that over the past few years, industry executives had given various suggestions to improve current product regulations.
For pension products, the notification said customers must be allowed to commutate up to 60 per cent of the policy sum assured, while those with market-linked pension products can partially withdraw their corpus. Unit-linked insurance product (ULIP) holders will be allowed to switch their asset allocation(s) during the settlement period to manage their funds better in a volatile market. Insurers will not be allowed to design individual term, group term and credit and micro insurance products across a range of policy terms, while in the case of group products the regulator will modify some guidelines so that they can be customer-based on the customers' requirements.
Further, the category of variable insurance products has been removed, while the provisions for non-linked variable products have been simplified.
The regulator said that they have introduced new criteria governing the appointment of independent actuary(s) by life insurance companies. Companies can file their comments and suggestions on the draft regulations for linked and nonlinked products, respectively, by November 15.