IRDAI Mandates Life Insurers To Offer Loan Facility To Policyholders
The insurance regulator said robust systems should be in place for grievance redressal of policyholders.
The Insurance Regulatory and Development Authority of India announced that the inclusion of a policy loan feature is now compulsory in all life insurance savings plans. This will allow policyholders to address their liquidity needs.
In a master circular, issued on Wednesday, that combines all regulations related to life insurance policies, IRDAI also stated that the free-look period—which allows policyholders to review the terms and conditions of the policy—has been increased to 30 days. Earlier, it was 15 days.
The latest master circular follows a similar exercise by the regulator for general insurance policies.
"This is an important step in the series of reforms taken up by the insurance regulator with interests of the policyholders at the core. A conducive environment is now facilitated to spur innovation, enhance customer experience and satisfaction," the IRDAI said.
According to the master circular, the facility of partial withdrawal under pension products is allowed enabling the policyholders to meet their specific financial needs for important life events like higher education or marriage of children; purchase or construction of residential houses or flats; medical expenses, and treatment of critical illness.
IRDAI stated that it is important to guarantee fairness and good value for both types of policyholders, those who are surrendering their policies as well as those who are continuing with them. Additionally, the regulatory body emphasised the necessity of having effective mechanisms for addressing policyholder complaints.
"In case the insurer does not appeal against the award of insurance ombudsman and does not implement the same within 30 days, a penalty of Rs 5,000 per day shall be payable to the complainant," the circular said.
Insurance companies have also been asked to put in place mechanisms to improve persistency, curb mis-selling, avoid financial loss to the policyholders, and enhance long-term benefits for them.
(With inputs from PTI)
