IRDAI Allows Modifications To Withdrawn Products In Interest Of Existing Policyholders
The circular comes into force with immediate effect.
The Insurance Regulatory and Development Authority of India issued a circular allowing life insurers to extend additional options to existing policyholders whose products/policies were withdrawn and closed for new business.
The circular, released by the regulator on Tuesday, would apply to policyholders who have existing policies in the insurer's books, but the life insurer no longer issues such products to new customers.
It aims to extend additional options/benefits to existing policyholders and provide enhanced flexibility while ensuring that the benefits are not adversely impacted, the regulator said.
The circular comes into force with immediate effect.
It allows the following options to be made available with respect to the withdrawn policies:
Addition of existing riders, which are open for sale.
Addition of premium payment modes (frequencies).
Reduction in interest rates for revivals/policy loans.
Addition of one or more payment frequencies to income benefits payable to policyholders.
The regulator has also laid down certain conditions that must be satisfied while providing additional options to existing policyholders.
Some of these are that the policyholders are suitably informed about the options; a specific request has been obtained from them with respect to points 1, 2, and 4 mentioned above; the new changes are appropriately documented in the respective policy document; policyholders take a well-informed decision; and the term of the rider does not exceed the outstanding policy term under the base policy.
The regulator has also mandated that life insurers submit a statement of changes to withdrawn products on an annual basis along with their appointed actuary’s annual report.
