New IRDAI Rule: Life Insurers Must Offer Loans Against Policies. All You Need To Know

New IRDAI Rule: IRDAI has extended the free look period to 30 days from 15 days. This period allows policyholders ample time to review and understand the terms and conditions of their policies

New IRDAI Rule: The Insurance Regulatory and Development Authority of India (IRDAI) has announced that policy loans will now be mandatory for all life insurance savings products, providing policyholders with an essential liquidity option.

In a comprehensive master circular, which consolidates regulations pertaining to life insurance policies, IRDAI has extended the free look period to 30 days from the previous 15 days. This period allows policyholders ample time to review and understand the terms and conditions of their policies.

"This is an important step in the series of reforms taken up by the insurance regulator with interests of the policyholders at the core. A conducive environment is now facilitated to spur innovation, enhance customer experience, and satisfaction," said IRDAI.

The master circular also introduces the facility of partial withdrawals under pension products. Policyholders can now withdraw funds to meet significant financial needs such as higher education or marriage of children, purchase or construction of a residential property, and medical expenses including the treatment of critical illnesses.

According to IRDAI, fairness in the surrender of policies, ensuring value for money for both surrendering and continuing policyholders. Additionally, the regulator has mandated robust systems for the grievance redressal of policyholders.

"In case the insurer does not appeal against the award of the insurance ombudsman and does not implement the same within 30 days, a penalty of Rs 5,000 per day shall be payable to the complainant," the circular warned.

Insurance companies are also required to establish mechanisms to improve policy persistency, curb misselling, and avoid financial losses to policyholders, thereby enhancing long-term benefits for them.

The new master circular mirrors IRDAI's recent efforts to streamline regulations for general insurance policies, marking another step towards a more transparent and customer-centric insurance sector.