Irdai comes out with mandatory standard life insurance covers for the first time

Irdai comes out with mandatory standard life insurance covers for the first time

• By Staff Writer

Irdai comes out with mandatory standard life insurance covers for the first time

MUMBAI: In a move set to make life insurance covers cheaper and accessible, Irdai has come out with the guidelines for a standardized individual term insurance mandating all life insurance companies to offer these policies from 2021.

The policy called ‘Saral Jeevan Bima’ has been designed by the Authority as a non-linked, non-par protection policy with stipulated pay out in the event of death of the sum-assured. Insurers have been mandated to file their products by December 2020 and then market them starting 2021.

The Insurance Regulatory and Development Authority said on Thursday that the standardization of term policies was necessitated due to complex wordings on existing policies and the lack of awareness among a large section of population to make informed choices.

“Customers who cannot devote adequate time and energy to make informed choices find it difficult to select the right product,” said Irdai in a circular. “To take care of this situation and to make available a product by all Life Insurers that will broadly meet the needs of an average customer, it is felt necessary to introduce a standard, individual term life insurance product, with simple features and standard terms and conditions.”

The insurance regulator also said that such a standardized product would also reduce mis-selling and potential disputes at the time of claim settlement. It was a long-standing objective of Irdai to offer a standard term life policy. According to industry executives, this will help in making term covers easier for less affluent sections of the society.

According to Bharat Kalsi, Chief Financial Officer of Bajaj Allianz Life the latest circular is in line with the requirements of the industry.

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