Irdai approves modification on withdrawn life insurance products
Mumbai, Sep 1, 2023
The Insurance Regulatory and Development Authority of India (IRDAI) approved the reduction of interest rate for revivals or policy loans, among others. The regulator sanctioned a set of modifications to withdrawn life insurance products. These are applicable to existing policies that were closed for new business but still exist on insurers' books.
The alterations are introduced to give additional benefits and flexibility to existing policyholders, ensuring they are not adversely impacted.
As per the circular released recently, the insurance regulator has decided to allow the addition of existing riders which are open for sale, the addition of premium payment modes, reduction in interest rate for revivals or policy loans, and the addition of one or more payment frequencies to income benefits payable to policyholders.
While offering these benefits, insurers should ensure that the withdrawn application is not altered. Policyholders must be informed about the options available to enable well-informed decisions.
Furthermore, the changes must be properly documented in the policy document. Insurers must also ensure that the changes are not detrimental to the policyholders.
Finally, they must also ensure that the term of the rider does not exceed the outstanding policy term under the base policy.
Although the circular is effective immediately, these changes will require approval from the Product Management Committee (PMC).
[The Business Standard]