For insurance policies surrendered within three years, IRDAI reduces the surrender value
The new guidelines for insurance plans have been published by the Insurance Regulatory and Development Authority of India (IRDAI).be the same, or even less, in the event that the insurance coverage is cancelled within the three-year period. The final rules pertaining to the insurance policy’s surrender value have already been released. The regulations will take effect on April 1.
Six regulations from IRDAI have been combined into a single framework known as the Insurance Products Regulation, 2024. Its goals are to make it possible for insurance firms to provide returns or refunds within three years of the original purchase, to react swiftly to demands from the market, to facilitate business transactions more easily, and to promote insurance. If the insurance is surrendered within three years, the new regulation states that the surrender value will either be reduced or remain the same.
According to the new surrender value regulations, the policyholder will get the premium if the policy is 1%. Refund values for policies that are reimbursed between the fourth and the seventh year will be capped at 50% of the whole premium. If the policyholder surrenders it during the past two years, the insurance company will reimburse them for a total of 90% of the premiums paid.
In the insurance industry, surrender value is the sum that insurance firms provide to policyholders who choose to cancel their policies before they mature. A predetermined sum is given to the policyholder in the event that he “surrenders” during the policy term. Prior to this, IRDAI had altered the payment guidelines, and it was suggested that a larger payout be made upon insurance surrender. The draft rule that was published in December 2023 has been revised into these final regulations.
In a statement, the Insurance Regulatory and Development Authority of India (IRDAI) said that new regulations support improved insurance product pricing and design. It also entails tightening the regulations pertaining to special return value and guaranteed value on insurance returns.
IRDAI adopted eight integrated regulations based on principles during a meeting on March 19, after a thorough examination of the insurance industry’s regulatory structure. The reports state that these regulations address things like registration, operating foreign reinsurance offices, electronic insurance markets, insurance products, and safeguarding policyholder rights in rural and social sectors. In addition, the new legislation will take into account that insurers must prioritize the interests of policyholders when expanding or shutting offices, both locally and abroad.
