Insurance Regulatory and Development Authority has warned HDFC Life for violation of File & Use Guidelines i.e., changing the terms and conditions of approved versions of the products without prior approval from the Authority. Further, Irda has asked the insurer to provide similar death benefit to customers for two of its products, since those taking the policy on or after April 1, 2012 were given higher death benefits.
In two of its products, HDFC Life had issued policy endorsements assuring additional death benefits which is equivalent to higher of ten times annualised premium or the death benefit as defined in the policy document to the policies issued on or after April 1, 2012 under these products. However, as per File & Use of the products under reference, the death benefit payable is the Basic Sum Assured plus attached reversionary bonuses plus interim and terminal bonuses.
Hence, Irda said that by issuing the endorsements, the insurer did not maintain equity between the same class of the policy holders i.e., policy holders who have purchased the policies prior to and on or after April 1, 2012 in terms of death benefit. Irda has directed HDFC Life to provide similar death benefit to all the policy holders of the two products.
It added that the enhanced death benefit provided by HDFC Life to its policy holders with effect from April 1, 2012 shall be offered to all the policy holders who have opted for the products prior to April 1, 2012 also and shall be debited from the shareholders' account as and when these additional death benefits are settled.
