The regulator has allowed partial withdrawals in linked pension products
Life insurance companies will be able to offer flexible policy tenures for certain products. According to a draft proposal by the Insurance Regulatory and Development Authority of India (IRDAI), insurers can design term, credit life and micro-insurance products that have a range of policy term.
IRDAI had constituted a committee for reviewing the product regulations in the life insurance sector. Based on the report and comments from stakeholders, the regulator has brought out the draft regulations.
Draft norms for linked and non-linked insurance products have been released. The regulations have said that the minimum death benefit has been made seven times for regular premium products and 1.25 times for single premium products for all ages.
Earlier, the minimum death benefit was 10 times the annual premium for those less than 45 years and seven times the annual premiums for those above 45 years. Even for unit-linked insurance products, age-wise diversification of death benefit has been removed and it is standard across all ages.
For non-linked insurance products, the revival period has been extended to 5 years from the current 2 years. Here, non-linked policies to acquire guaranteed surrender value after 2 years.
In unit-linked insurance products, after payment of premiums for first five completed policy years the policyholder may be given an option to decrease the premium by a maximum of 50 percent. Once the premiums are reduced, they cannot be increased subsequently.
When the premiums are reduced, the death benefit will also be reduced proportionately based on reduced annualised premium.
In the pension product category, IRDAI has given the option for partial withdrawal for those linked to the equity markets. Also, when it comes to buying an annuity at the end of a pension product’s policy term, the policyholder has an option to choose from an open market. Currently, they are limited to buying an annuity product from the same insurer.All stakeholders have been given time till November 15 to give their views on the draft proposals.