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IRDAI may relax rules for pension plans & ulips, make surrenders easy

Now, minimum sum assured on death can be seven times the annualised premium.

ET Bureau|
Jul 16, 2019, 08.34 AM IST
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On the pension front, the regulator has brought insurance on a par with the National Pension System.
Mumbai: The Insurance Regulatory and Development Authority of India (Irdai) Monday released final product guidelines for both traditional and unit linked insurance products to improve the product proposition. It has relaxed rules governing pension products, Ulips and traditional plans by easing the surrender and annuity norms.

Now, minimum sum assured on death can be seven times the annualised premium. The minimum death benefit should be 105 per cent of the premiums received by an insurer until the death of the covered life.

On traditional products known as money back plans, the company will pay surrender value after payment of at least two consecutive years of premium from three mentioned earlier. The value will go up from 35 per cent in first two years to 90 per cent during the last two years.

On the Ulip front, the regulator has extended the revival period to three years from two. Insurers will have to communicate within 3 months and the policyholder will have the option to revive the policy within the revival period of three years. Within a product, the cost of rider cover can be levied through rider charge or level rider premium.

At present, rider premium was deducted from the Ulips in the form of NAV.

The regulator has allowed reduction of premium after payment of premium for the first five policy years and once reduced, premiums cannot be increased subsequently. Non-linked whole life policy would provide coverage up to 80 years.

On the pension front, the regulator has brought insurance on a par with the National Pension System. It has allowed holders of pension plans to utilize all, or take up to 60 per cent, to purchase immediate annuity or deferred annuity from the same insurer at the prevailing annuity rate or from any other insurer.

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IRDAI may relax rules for pension plans & ulips, make surrenders easy

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