IRDA Regulations That Govern Life Insurance Policies in India    

Are you looking for suitable life insurance plans for yourself and your family? You may have come across the IRDA regulations governing such policies. The Insurance Regulatory and Development Authority of India has specific guidelines for the Insurance sector. These rules stick to the Insurance ACT of 1938 under section 114 A. Have you ever wondered why there is a need for stringent regulations in purchasing a life insurance plan? It is majorly to safeguard the rights of policyholders and monitor the insurance sector keenly.

The regulations of IRDA for insurance policies keep changing from time to time. The current norms intend to govern the insurance business and preserve financial stability unbiasedly. But is this the only role of IRDA? Well, read ahead to know more about it.

The Function and Role of IRDA

IRDA operates on a higher level to keep the insurance process intact, formulating regulations to benefit both the insurer and the insured. 

For Policyholders:

• Ensure Faster Claim Settlement: As stated above, IRDA focuses on protecting the interests of the insured. It ensures that the insurance claiming process is quick and hassle-free.
• Freedom from Frauds: The stringent regulations set by IRDA lessens the chances of negligence or deception as all insurance companies adhere to them.
• Informed decision-making: IRDA educates policyholders about the ins and outs of insurance. It enables transparency, and the insured is well aware of their rights while purchasing life insurance plans.

For Insurers: 

• Gives Permission: IRDA is central to all insurance companies – it provides registration certificates and grants operational permission. In short, it is like a license to be renewed and issued for the insurer to function. IRDA also has the right to cancel or suspend a certificate. 
• Regulate Insurance Industry: Every insurance company relies on IRDA to function. IRDA ensures that there is no form of misconduct. It determines the insurance rates, plans, terms and conditions so that the insurance sector operates smoothly. 

• Addressing Complaints: IRDA has established a complaint panel to receive and address the grievances of the insurance companies. For instance, the IRDA attempts faster resolution of conflicts (if any) in the claiming process.

IRDA Regulations for Life Insurance Plans

• Death Benefit: IRDA has set standard criteria to benefit family members on the policyholder’s demise. It states that the minimum sum assured on death over the whole duration of the policy for all non-linked individual life insurance products shall not be less than seven times the annualised premium for limited or regular premium products and 1.25 times the single premium for single premium products.

• Reducing Surrender Charges: Life insurance plans come with specific charges that one must pay while purchasing. The surrender fee is one of them. However, the surrender fee drops gradually every year. One can calculate it by using the life insurance calculator. 

• Flexible Add-ons: Initially, the cost of add-ons or riders in the ULIP plan was debited from earned units. But as per new regulations, the policyholders can choose to pay an additional premium for it every month.

• Claim Resolution: IRDA states that if the insurance company delays the claiming process, they will be required to pay interest on the claiming amount. For instance, the claim or the insurance money should be settled within 30 to 45 days from the last document submission request.

• Compulsory Certification of Insurance Companies: IRDA looks at the licensure process of insurance companies. IRDA rules mandate insurers to keep their certifications and registration up to date to avoid legal issues. As a result, it eases the insurance business and provides reliability and clarity to the policyholder before purchasing a life insurance plan.

Conclusion

The IRDA regulations help companies formulate new plans and strategies to promote the maximum sale of insurance policies. It is a core advantage to the policyholder as it allows them to select the best life insurance plan and be transparent with its terms and conditions. Use the life insurance calculator to make an informed decision. The overall goal of setting these guidelines is to ensure the proper functioning of the insurance industry. Read and analyse all terms before you buy a suitable life insurance plan