New Delhi: Regulator Insurance Regulatory and Development Authority of India (IRDAI) on Wednesday said the facility of policy loan is now mandatory in all life insurance savings products, enabling policyholders to meet liquidity requirements.
Issuing a master circular which consolidates all regulations with regards to life insurance policies, IRDAI also said the free look period, which provides time to review the policy terms and conditions, is 30 days as against 15 days earlier.
The latest master circular follows a similar exercise by the regulator for general insurance 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," IRDAI said.
According to the master circular, the facility of partial withdrawal under pension products is allowed enabling the policyholders to meet their specific financial needs for important life events like higher education or marriage of children; purchase/ construction of residential house/flat; medical expenses, and treatment of critical illness.
In case of surrender of policies, reasonableness and value for money is to be ensured for both surrendering policyholders and continuing policyholders, IRDAI said.
Further, the regulator said robust systems should be in place for grievance redressal of policyholders.
"In case the insurer does not appeal against the award of 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 said.
Insurance companies have also been asked to put in place mechanisms to improve persistency, curb mis-selling and avoid financial loss to the policyholders and also enhancing long-term benefits to them.