Insurance: Payouts in installments prevents misuse of claims money

The payout will be higher under the instalment option, in accordance with the principle of time value of money. Since the insurer retains the customer's money for a longer period, it has to provide ad

The Insurance Regulatory and Development Authority of India (IRDAI) has come out with draft guidelines on allowing policyholders to receive claim settlement in instalments, instead of only as a lump-sum payout, as was the case until now. While staggered payouts were offered in life insurance, the regulator is now proposing to allow them in personal accident policies and benefit-based health insurance policies offered by general and health insurers as well. Once these guidelines are enforced, policyholders will be able to choose lump-sum or instalment option, or certain percentages of both.

This option will benefit policyholders in several ways. “Customers will