The insurance regulator will soon issue circular for allowing the Insurers to settle claims in installments in respect of personal accident and benefit based products.


A working group  constituted by the IRDA has laid down the details as how to implement the new system.

IRDA has favoured the concept of payments of claims in installments in respect of personal accident policies issued by general and health insurers and benefit based health insurance policies issued by all insurers as  claims offer an income in the hands of the claimants for a reasonable period of time on the happening of the contingent event insured under an underlying policy. 

It is further considered that this option may enable the policyholders of benefit based health insurance policies get a stream of income over a predetermined period of time post triggering of claim, said IRDAI.


In order to enable the insurers offer the option of settlement of claims in installments, the IRDA is planning to lay down the following steps.

-The option of allowing settlement of claim in lump-sum or in installments or both can be availed by the policy holders, the panel has suggested.  
-The policyholders may be provided an option of choosing either settlement of claim in lump-sum or in equated installments or both in parts, 
-Payment of claim amount in installments shall not be a default option and should in addition to the lump-sum option and shall be allowed based on the option exercised by the policyholder,
-A combination of both the options i.e. a percentage of the sum assured as a lump-sum payment at the time of claim and the balance sum insured in installments for a definite period of not exceeding the time limits specified by the norms  may also be offered as a part of product design,
-The claim payment period of the product shall be maximum of five years which shall be subject to product design. The claim installments shall be spread during claim payment period,
-A policyholder shall have the flexibility of choosing the settlement option of claims at all stages of policy contract, i.e. at the time of policy inception, on renewal, during the policy term or at the point of claims,
-The policyholder shall be given an option of altering the mode of receipt of payment of claim from lump-sum to installments and vice versa during the policy duration any number of times till the point of claim, which shall be effected in the policy document by placing suitable endorsements,
-Subsequent to commencement of payment of claims in installments, an option shall be made available to the policyholder to withdraw this option and seek the future installment amounts in lump-sum,
-Premium rate shall be same for both the options,

-The total claim amount payable in installment option shall always be higher than the lump-sum option.

-Linkage to interest rate for payment of claims in installmentsis not permitted.