Loan facility in life insurance is mandatory now: What you should know
Loan facility in life insurance Currently, insurers are obligated to offer a loan facility against policies, aiding policyholders in meeting their liquidity needs.
Loan Facility in life insurance Great news for policyholders! The Insurance Regulatory and Development Authority of India (Irdai) announced on Wednesday that all life insurance savings products must now incorporate a policy loan option, assisting policyholders in managing their liquidity requirements.
"This marks a significant stride in the series of reforms initiated by the insurance regulator, prioritizing the welfare of policyholders. It creates a conducive environment for fostering innovation and elevating customer satisfaction," stated Irdai.
Key Highlights:
1. Extended Free Look Period:
The free look period, granting policyholders the opportunity to review policy terms and conditions, has been prolonged from 15 to 30 days, allowing for more informed decisions.
2. Partial Withdrawals for Pension Products:
Policyholders can now make partial withdrawals from pension products to address specific financial needs related to significant life events such as:
- Higher education or marriage of children
- Purchase or construction of a residential house/flat
- Medical expenses and treatment of critical illnesses
3. Reasonable Surrender Values:
Irdai will ensure fair and value-based processes for surrendering policies, benefiting both surrendering and continuing policyholders.
4. Grievance Redressal Systems:
Insurers are mandated to establish robust systems for addressing policyholder grievances. Failure by an insurer to appeal against the insurance ombudsman's decision and implement it within 30 days will result in a penalty of Rs 5,000 per day payable to the complainant.
5. Enhancing Persistency and Preventing Mis-selling:
Insurance companies must deploy mechanisms to enhance policy persistency, prevent mis-selling, and safeguard policyholders from financial losses, ultimately promoting long-term benefits for policyholders.
