IRDAI directs life insurers to mandatorily provide loan facility in all life insurance savings products

Insurance Regulatory and Development Authority of India (IRDAI) has issued a Master Circular on Life Insurance business after a comprehensive review and consolidation of an array of provisions covered under four existing circulars, which now stands repealed. IRDAI has directed life insurance companies to mandatorily provide loan facility in all life insurance savings products, enabling policyholders to meet liquidity requirements. In this circular, IRDAI also said that the free look period, which provides time to review the policy terms and conditions, is 30 days as against 15 days earlier. 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.

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/ construction of residential house/flat; medical expenses, and treatment of critical illness. In case of surrender of policies, reasonableness and value for money is to be ensured for both surrendering policyholders and continuing policyholders. Further, robust systems to be in place for Grievance Redressal. Complainant to be informed about the escalation mechanism in place to Insurance Ombudsman, if the grievance is not redressed satisfactorily. 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 5000 per day shall be payable to the complainant. 

Insurance companies have also been asked to put in place mechanisms to improve persistency, curb mis-selling and avoid financial loss to the policyholders and also enhancing long-term benefits to them. The underlying principles of simplification and transparency in insurance enables a well informed decision by a prospect/policyholder. It minimises policyholder grievances; enhances customer satisfaction and confidence. It goes a long way to improve insurance penetration while also providing an inclusive, equitable and diversified insurance for all.