IRDA issues clarification on Linked and Non-Linked Insurance Product Regulations

S. No.

Type of product

Age of the life assured

Less than 45 years

45 years and above

Non-Participating products

1

Other than single premium products, where the policy term is five years or more but less than ten years.

 Highest of, 5 times the annualised premium or 105% of all the premiums paid as on date of death or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Highest of, 5 times the annualised premium or 105% of all the premiums paid as on date of death or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Participating products

Highest of, 5 times the annualised premium or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Highest of, 5 times the annualised premium or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

2

 Other than single premium products, where the policy term is 10 years or more.

Non-Participating products

Highest of, 10 times the annualised premium or 105% of all the premiums paid as on date of death or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Highest of, 7 times the annualised premium or 105% of all the premiums paid as on date of death or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Participating products

Highest of, 10 times the annuafised premium or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

Highest of, 7 times the annualised premium or minimum guaranteed sum assured on maturity or any absolute amount assured to be paid on death.

a.

In case of death due to suicide within 12 months:

i.

from the date of inception of the policy, the nominee or beneficiary of the policyholder shall be entitled to at least 80% of the premiums paid, provided the policy is in force or

ii.

from the date of revival of the policy the nominee or beneficiary of the policyholder shall be entitled to an amount which is higher of 80% of the premiums paid till the date of death or the surrender value/policy account value as available on the date of death.

iii.

In case of the variable insurance products, any charges recovered subsequent to the date of death shall be paid-back to nominee or beneficiary along with death benefit."

(1)

The premiums are aligned with that of individual pure term insurance products with similar term and entry age.

(2)

The maximum premium under such micro insurance products shall not exceed:

a.

in case of pure term insurance, Rs.750/- per annum per member.

b.

in case of term insurance with return of premiums, Rs.3000/- per annum per member.

(3)

The insurer shall monitor the experience regularly and submit an analysis of all such products in terms of expected and actual experience as an annexure to the Appointed Actuary Annual Report."

(i)

Collection of advance premium shall be allowed, the premium is collected within the same financial year.

(ii)

The premium so collected in advance shall only be adjusted on the due date of the premium.

(iii)

The commission shall only be paid on such due date."

1.

Regulation 5(f)(iii) is modified as below:

(i)

"In case of death due to suicide within 12 months from the date of inception of the policy or from the date of revival of the policy, the nominee or beneficiary of the policyholder shall be entitled to fund value/policy account value, as available on the date of death.

(ii)

Any charges recovered subsequent to the date of death shall be paid-back to nominee or beneficiary along with death benefit."

2.

Regulation 5(f)(v) is modified as below:

"For policies issued on minor life, the date of commencement of risk may start anytime within two years or on the policy anniversary after attainment of majority whichever is earlier from the date of commencement of the policy."

3.

Regulation 6(b)(ii) is substituted by the following:

"In case of linked products where guarantee charge is levied: If a guarantee charge is levied for the guarantees offered, the insurer shall submit a comprehensive documentation on such guarantee charge and demonstrate in their application under the File and Use."

4.

Regulation 6(b)(iii) is modified as below:

"in case of variable insurance products, the insurer may levy guarantee charge, if any, provided the guarantee offered throughout the term of the policy is not less than 4% per annum, subject to regulation 6 b (i) & (ii)."

5.

Regulation 8(a)(i) is modified as below:

"Except for single premium payment products, the premium paying term for all other individual products shall not be less than 5 years."

6.

Regulation 19(a) is substituted by the following:

"The minimum guaranteed interest rate applicable to the discontinued fund/discontinued policy account shall be declared by the Authority from time to time. The current minimum guaranteed rate of interest applicable to the discontinued fund/discontinued policy account value shall be 4 per cent per annum."

7.

Regulation 34(b) is substituted by the following:

"Except for single premium products, in all other products the overall charges in all linked products shall be distributed in an even fashion during the lock-in period such that the:

(i)

premium allocation charge and policy administration charge shall be spread evenly during first 5 years of the policy contract, without wide fluctuations;

(ii)

charges could change from year to year in a reasonably orderly manner so that the difference between the maximum and minimum charges during first 5 years shall not vary by more than 1.5 times.

(iii)

charges during lock in period shall be so structured such that the cap on net reduction in yield is achieved without any further additions to fund value at any time during the first five years of the contract. This provision is applicable to both single premium products and other than single premium products."

8.