IRDAI Rules for Buying Term Insurance in India
Updated On Aug 16, 2022
Table of Contents
The Pandemic reinforced the use of better digital services in all sectors worldwide, and the insurance sector is no exception. The insurance regulator in India, the IRDAI, left no stone unturned to render a simple, quick, and convenient digital service to its customers. The IRDAI took some bold and valuable steps in standardising the insurance products and replacing the tedious processes with simpler ones.
Rules for Buying Term Insurance in India from IRDAI
According to the new IRDAI guidelines, the customers should buy term insurance plans after authenticating their details through one-time passwords sent to their official mobile number. The authentication can be performed via the link that the insurers send the customers. It is a replacement for the wet signatures. The other IRDAI rules for buying term insurance in India are as follows.
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Digital Policies
The IRDAI has mandated the insurers to provide the policy document for the insured individuals through email. If the insured individuals ask for a hard copy, the respective insurance provider has to issue a new document at no additional cost. These methods will surely bring about great transparency and security concerning customer information.
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Email and Mobile Authentication
The Insurance providers are allowed to verify policy proposals through email or mobile phones. The provider will send the email to the policyholder, and to confirm the policy details, the customers should click the confirmation button and access the policy details. This digital authentication will streamline the policy purchase and offers great transparency to the insurer.
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Introduction of A Standard Term Plan
The rate of penetration for life insurance in India is about 2.74% in India. The Insurance regulator aims to bring in more people under the umbrella of insurance, and it has asked its insurers to offer standard insurance products. There are several advantages of introducing a standard term plan, and they are as follows.
- The regular term insurance plans have different income criteria, based on which a term plan is issued to the customer.
- The customer can choose the sum assured as per their premium paying capacity.
- For the benefit of the customers, the insurance plans will be available across all the digital channels.
- Policyholders can seek an additional discount of 20% if they wish to buy the plans online.
- This remarkable step by IRDAI to encourage people from rural backgrounds under the net of insurance.
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E- KYC in Insurance
To enforce the policy buyers' safety and convenience, the Insurance Regulatory and Development Authority of India has mandated new rules for buying term insurance in India. The electronic KYC was the much-required inclusion concerning the insurance domain. The policyholders could enjoy the convenience of buying new policies from the comforts of their homes. Let us discuss the key rules for buying term insurance in India here.
These developments that the IRDAI introduces have altered the entire landscape of the insurance industry in India for the better. These announcements not only benefit the customers but have also made the entire process easy for the insurers.
Bottom Line
These new guidelines given by IRDAI will better transform the insurance industry's landscape. This move encourages a safe and convenient means to buy term insurance and has also brought in great transparency, thereby forcing insurers to adopt a modern approach to digital insurance.
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