Insurance purchase to get simpler as IRDAI issues circular

The Insurance Regulatory Development Authority of India (IRDAI) has issued a circular meant for the point of sales products and persons for life insurance (POSP-LI).
Insurance purchase to get simpler as IRDAI issues circular
Insurance purchase to get simpler as IRDAI issues circular
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Insurance products still remain a mystery to ordinary people, especially the critical terms written in fine print. The Insurance Regulatory Development Authority of India (IRDAI) has now issued a circular meant for the point of sales products and persons for life insurance (POSP-LI). It’s a master circular that tries to define the way the policies are presented to the prospective customers.

It says, for example, how there should be two parts in the key features document (KFD) and how the proposal form will be attached to it through a perforated joint to be torn off and the KFD portion retained with the customer and so on. This master circular is to cover vanilla life insurance policies. The POSP-LI factor comes in since most such polices are sold by life insurance companies through agents recruited by them. IRDAI has stipulated the type of polices that can be sold through the agents. These include pure term insurance products with or without return of premium. They can sell non-linked non-participating endowment product, immediate annuity products and non-linked non-par health insurance products with fixed benefits.

The circular goes on to mention that the POSP-LI being used as the intermediary to sell the life insurance policies, have to be given formal training for 15 hours internally organised by the company and an examination conducted at the end of the training and a certificate issued. There will be codes assigned to trace the policies back to the POPS-LI who sold them. Any misconduct on the part of the POSP-LI will be the responsibility of the insurer. Any penalties imposed will be paid by the company.

The master circular mentions that the KFD document must contain the relevant information on the policy terms, including the sum assured on death, maturity and surrender value and so on. The exclusions, details of the registered name and address of the life insurance company must be stated on the KFD document. If the policy is being taken online, a hard copy of the KFD has to be mailed to the proposer /insured.   

Finally, there are instructions on the time the insurance company can take, once the proposal form and the premium has been collected. Within four days, the policy acceptance or rejection has to be communicated to the proposer. If there is a rejection for any reason, the refund of the money must take place within seven days.

The proposer’s Aadhaar card or PAN card can be used as proof of identity of the proposer for these policies.

 

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