The Life Insurance Council on Monday said all the insurers are duty-bound to settle claims if a death occurs due to COVID-19.
All life insurers, both public and private, are committed to process any death claim pertaining to COVID-19 at the earliest, the council said in a statement.
It said the clause of ‘Force Majeure’ will not apply in case of COVID-19 death claims.Force Majeure is described as an event or effect that can be neither anticipated nor controlled.
This step was taken to reassure customers who had reached out to life insurance companies seeking clarity on this clause in their contract as well as to dispel rumours to the contrary, it said.
All life insurance companies have also communicated to their customers individually in this regard.
Anil PM, Head – Legal & Compliance, Bajaj Allianz Life, said “The force majeure condition will not have any impact on insurance contracts of customers due to COVID-19. We will continue to honour the death claims received from our customers pertaining to the COVID-19 pandemic, and assure them of any assistance on their policy in these crucial times”
“The spiralling global and local impact of COVID-19 pandemic has emphasized the fundamental need for life insurance in every household. The life insurance industry is taking every measure to ensure that the disruption caused to policyholders, due to the lockdown is minimal, by providing them uninterrupted support digitally, be it for honoring death claims related to COVID-19 or for servicing their policy,” said Life Insurance Council Secretary General S N Bhattacharya.
“We reiterate that all life insurance companies stand by their customers in these difficult times and the customer should not be swayed by misinformation or misrepresentation,” he added.
Earlier, regulator Irdia has provided an additional 30-day grace period for policyholders to pay the premium on life insurance policies, whose renewal date fall in March and April amid the lockdown to fight against coronavirus pandemic.
Irdai further said where unit-linked policies mature (up to May 31, 2020) and fund value is to be paid in lumpsum, life insurers "may offer settlement options" in accordance with relevant regulation.
"This one time option is regardless of whether such option exists or not in the specific product," Irdai said in a circular.
Life insurers, however, will have to exercise all due care and diligence to explain clearly the possible downside risk of continued fluctuation of fund value based on daily net asset value (NAV).
Irdai has already provided additional time for payment of renewal premium in case of health insurance policies and motor third party insurance.