Recently, a set of new regulations in relation to the surrender value of insurance policies was released by the Insurance regulator Insurance Regulatory and Development Authority (IRDAI).
IRDAI Released New Guidelines For Insurance Policies
Reportedly, this new set of rules is scheduled to come into effect from the next financial year which is April 1, 2024.
The surrender values for life insurance policies are set to decrease if the policies are surrendered within three years of timeline, as per the latest guidelines.
Howere, the rules are different if the policyholder surrenders the policy between fourth and seventh year.
The latest guidelines released by IRDAI suggest that in the above case, it would lead to an increase in the surrender value.
IRDAI’s Latest Guidelines For Insurance Policies
- As per these rules, if policy is surrendered during the second year, a total of 30 percent of total premiums would be paid.
- In case if the policy is surrendered during the third year then 35 percent of total premiums stand to get paid.
- If the policyholder surrenders the policy between the fourth and seventh year then a total of 50 percent of total premiums would be paid.
- When policy is surrendered during the last two years then 90 percent of total premiums would get paid.
Please note here for non-single premium life insurance policies, a guaranteed surrender value will be given after the payment of insurance premiums for a minimum of two years in a row.
How Does This Help?
These steps will act as a booster for the insurance sector, said Adhil Shetty While talking about these regulations, the CEO, Bankbazaar.com.
Further adding, “These newly-instituted regulations are designed to foster good governance pertaining to pricing mechanisms and to ensure the provision of guaranteed surrender value, coupled with comprehensive disclosures to policyholders. These steps are likely to act as a booster for the sector and make it a win-win situation for customers and insurance issuers.”
