The Insurance Regulatory and Development Authority of India (Irdai)  on Friday has  proposed  a set of significant changes in the current regulations on product guidelines for linked and non-linked life insurance policies that would impact designing term, credit life and micro-insurance products 


Apart from this, innovations in the methods of placing the products in the market, coupled with innovations in product benefits and structures is the main driving force which necessitated review of the existing product regulations,’’ said IRDAI.


The following are some of the key changes proposed to the current Regulations
a)  Minimum death benefit has been made 7 times for regular premium products and 1.25 times for single premium products for all ages,.
b) Non-linked policies to acquire guaranteed surrender value after 2 years,

c)Revival period extended to 5 years from the current 2 years in respect of non-linked products,

d)In respect of pension products, option for commutation up to 60 pension  allowed,

e)Facility for partial withdrawal allowed for linked pension products,

f)In respect of annuities Open market option is allowed,

g)Settlement option period extended till 10 years or original policy term whichever is lower,

h)Switches now allowed during settlement period. This helps the customers of unit linked policies to manage their funds better in a volatile market situation,

i)Insurers can now design individual term, group term and credit and micro insurance products which offer a range of policy terms,

j)Provisions governing group products modified to allow wider range of products based on customer requirement,

k) Category of linked Variable Insurance Products is removed as linked product structure addresses the requirements in a better manner. The provisions relating to Non-Linked Variable insurance products are simplified,.

l)Provisions dealing with operational aspects have been taken out of product regulations so that separate instructions can be issued from time to time by the IRDAI keeping in view the emerging requirements,. 
m) Provisions for ‘With Profit Management Committee’ revised, to include more details on its working.  Eligibility criteria for Independent Actuary has also been introduced


RM Vishakha , MD & CEO, India First, said the new set of regulations are definitely a pro-customer move by the IRDAI. 


“Anything which was good for customer, would help us grow our business too. The perspective in terms of revival period extended to five  years from the current two  years in respect of non-linked products, is a big positive development,'' said Vishakha.

Similarly, the move to extend settlement period  option for pension products till 10 years for is a very good. Normally, when your policy is  maturing at a point when market is  down, you  can invest your money in debt to get some kind of security. But, at present, even debt funds are not giving good returns as their NAVs have gone down. And, if this is your maturity time, you wouldn’t have got any return at all. So, you need an option to extend your policy,said Vishakha  

In respect of pension products, option for commutation up to 60 per cent is now allowed. Earlier, the policy holder was able to withdraw upto 33 per cent only.

Industry has been representing to review the various provisions of the current product regulations to ensure insurance products cope with the dynamism of the market,said IRDAI .

The IRDAI had earlier constituted a “Committee on Review of Product Regulations – Life” for reviewing the said Regulations. The Report submitted by the committee was uploaded to the IRDAI’s website and the comments of the public have been  invited.  

A working group would be  constituted to consider the recommendations of the Committee and the feedback, said IRDAI.