The Insurance Regulatory and Development Authority of India (Irdai) in a late notification on Friday evening notified new draft product guidelines for linked and non-linked life insurance policies. One of the significant changes brought under these draft guidelines includes increasing the minimum death benefit to seven times for regular premium products and to 1.25 times for single premium products for all ages.
"There were significant changes in the trends in product structures driven by the customers’ needs, wants and preferences...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," the notification states.
The move, Irdai says that is prompted also by the fact that for the past few years industry executives had provided various suggestions to improvements in current product regulations, so as to be line the dynamics of today's insurance market environment, which invariably includes global insurance market dynamics.
Other changes that include: for pension products customers must be allowed to commutate upto 60 per cent of the policy sum assured, while those with market-linked pension products can partially withdraw their corpus.
Unit-linked insurance product (ULIP) holders will be allowed to switch their asset allocation(s) during the settlement period, "to manage their funds better in a volatile market situation," Irdai says.
Insurers will not be allowed to design individual term, group term and credit and micro insurance products across a range of policy terms, while in the case of group products the regulator will modify some guidelines so that they can be customer based on the customers (company or corporate) requirements.
Further, the category of Variable Insurance Products has been removed while the provisions for non-linked Variable products have been simplified.
The regulator says that they have also introduced new criteria governing the appointment of independent actuary(s) by life insurance companies.
Companies can file send their comments and suggestions on the draft regulations for linked and non-linked products, respectively, by November 15.