Life insurance

1. Product suitability

   Agents, distributors, and other intermediaries will now have to check the suitability of the product as per customer's needs and recommend products accordingly. They are expected to acquire the customer's personal and financial details such as age, income, life stage, financial goals, and existing insurance portfolio before any recommendation. This guideline seeks to make sure that customers buy products based on need analysis so that there isn't undue risk involved.

   [Read: What should be your check points before buying insurance?]

2. Benefit illustration (BI)

   The regulator has standardised the format in which benefit illustrations for different product category has to be presented. Benefit illustration gives a short description of the plan and includes details such as premium payable, duration, surrender value, applicable charges, etc. The illustration must clearly specify which portions of the benefit are guaranteed and which are non-guaranteed.

   For market linked products such as ULIPs, the effect of various charges is captured in the net yield figure. These are shown separately for assumed rates of return of 4% and 8%. The BI has to clearly state that these are not guaranteed returns, nor do they signify the lower and upper limits of the returns.

   This aims to ensure that the customers fully understand the benefit of the policy that they are buying. The benefit illustration will have to be signed by both the policyholder and the intermediary.

   In case of online sale of insurance, BI will have to be generated. Customers will be able to proceed with form filling and payment of premium only after they have accepted the illustration. The policyholders will receive the details on their registered email address.

   [Read: How Are Life Insurance Claims Handled In Case Of Mysterious Death]

3. Trained agents

   Market linked products such as ULIPs are risky and difficult to understand and therefore not suitable for every customer. Such products can now be sold by agents only after undergoing special training to gain comprehensive knowledge of the product, including the risks involved.

   These changes will take effect from December 1, 2019.

Health insurance

IRDAI has provided clarity on permanent exclusions in health insurance and pre-existing diseases.

Earlier the list of diseases under permanent exclusion list differed from one insurer to another. IRDAI has now defined a list of 16 ailments that will be under a permanent exclusion list. This means, the policyholder will not be entitled to claims related to ailments on that list.

However, claims related to some ailments such as age-related ailments like knee-cap replacement, cataract surgery, Alzheimer's and Parkinson's disease were earlier excluded from health insurance policy and rejected by insurers will now be covered.

Similarly, ailments occurring due to working in places were conditions are hazardous, artificial life maintenance, internal congenital disorders, mental illness, puberty and menopause-related disorders and genetic diseases were not covered by insurers. As per new guidelines, these ailments cannot be treated as permanently excluded.

With this the regulator aims to standardise the exclusions in health cover and ensure that more number of illnesses are covered under the policy.

In regards to pre-existing disease, the regulator stated that the waiting period for temporary exclusions cannot exceed 48 months. If suppose the policyholder wishes to port the cover to another insurer, the policyholder needs to serve waiting period of 48 months in total. The new insurer cannot impose a fresh waiting period.

Further, if the policy holder is diagnosed with a serious ailment within three months of buying the policy, it will be treated as pre-existing disease and the waiting period will be applicable.

These guidelines are to be implemented from October 1, 2019 and changes for existing products are to be updated by October 1, 2020.

[Read: Why You Should Buy A Health Insurance Policy For Your Newborn Asap!]

Travel insurance

Travel portals typically provide travel insurance as a pre-selected default option when you buy tickets online. Often customers are unaware about the option selected and purchase the product even if they do not need it. Additionally, these portals do not provides details of the policies sold such as the features, risks covered, exclusions, etc.

IRDAI has now mandated that customers be allowed to choose whether they want to purchase the insurance along with the ticket. With effect from October 1, 2019, pre-selection of policy will not be allowed. Furthermore, the details of the cover must be made transparent to make sure that the customers understand terms and conditions of the policy.

In case of domestic travel, the travel insurance premium shall not be received more than 90 days in advance to the date of the commencement of risk. No such restriction is applicable in case of international travel.

IRDAI also stated that insurers will have to ensure and verify whether the travel portals are complying with the rules every three months.

While the IRDAI is taking steps to curb mis-selling and bring in more transparency, as a policyholder make sure that you fully understand the terms and conditions before purchasing any kind of policy. Further, check if the policy matches your needs. Lastly, keep your insurance and investment instruments separate and avoid combining the two.

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tapanch4628@gmail.com Oct 13, 2019 Perfect information.
tapanch4628@gmail.com Oct 13, 2019 Perfect information.

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