Full Text
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 206] NEW DELHI, FRIDAY , MARCH 22, 2024 /CHAITRA 2, 194 6
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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad , the 20th March, 2024
Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024
F. No. IRDAI/Reg/8/202/2024 .—In exercise of the powers conferred under clause (zba) and clause (zd) of
sub section (2) of section 114A of the Insurance Act, 1938, and clause (i) of sub section (2) of section 14 and section
26 of the Insur ance Regulatory and Development Authority Act, 1999, the Authority, in consultation with the
Insurance Advisory Committee, hereby makes the following regulations, namely:
CHAPTER -I
PRELIMINARY
1. Short title, applicability and commencement:
(1) These regulations may be called the Insurance Regulatory and Development Authority of India (Insurance
Products) Regulations, 2024.
(2) These regulations shall come into force from the date of its publication in the Official Gazette or 1st
April, 2024, whichever is later.
(3) Unle ss otherwise specified herein, these regulations shall be applicable to insurers who have been granted
certificate of registration to transact the business of life insurance or general insurance or health insurance
in India, as applicable.
(4) These regulations shall be reviewed once in every three years from the date of its publication, unless the
review or repeal or amendment is warranted earlier.
2. Objectives: The key objectives of these regulations are as under:
(1) To facilitate insurers to respo nd faster to the emerging market needs and also to design innovative
products, to promote ease of doing business and to improve insurance penetration.
(2) To protect the policyholders’ interests by enabling insurers to adopt good governance while designing and
pricing the products.
(3) To ensure sound and responsive management practices for effective oversight and adequate due diligence
with regard to insurance products, including innovative products considering the interests of
policyholders.
3. Definitions:
In these regulations, unless the context otherwise requires -
(1) “Act” means the Insurance Act, 1938 (4 of 1938).
(2) “Authority” means the Insurance Regulatory and Development Authority of India established under the
provisions of section 3 of the Insurance Regulatory an d Development Authority Act, 1999.
(3) “Competent Authority” means
(a) Chairperson or
(b) such whole -time member or such committee of the whole -time members or such officer (s) of the
Authority, as may be determined by the Chairperson.
(4) “File and use” means the procedure where the insurers are permitted to market the product only after prior
filing to the Authority and assignment of Unique Identification Number (UIN).
(5) “Group” consists of persons who join together with a commonality of purpose or engaging in a co mmon
economic activity and includes employer – employee group and non -employer – employee group:
a. Employer – employee group is a group where an employer -employee relationship exists between the
master policyholder and the member in accordance with the applica ble laws.
b. Non-Employer – employee group is a group other than employer – employee where a clearly evident
relationship between the member and the group policyholder exists for services/activities other than
insurance.
(6) “Government sponsored insurance scheme” means any insurance scheme, designed or notified or
sponsored by the Central Government and/or the State Government and offered by insurers. The schemes
may or may not be subsidized by the Central Government and/or the State Government.
(7) “Micro -insurance business” means category of insurance business provided through the products
categorized as micro -insurance products under these regulations.
(8) “Micro -insurance policy” means an insurance policy which has been issued through solicitation of micro -
insurance product.
(9) “Micro -insurance product” includes:
a. life micro -insurance product or general micro -insurance product or health -micro insurance product;
b. insurance products designed or notified or sponsored by the Central Government and/or the State
Government und er the head “Micro -insurance”;
c. insurance products subsidized either fully or partly by the Central Government and/or the State
Government; and
d. any other product approved as “Micro -insurance” product by the Competent Authority.
(10) “Product management committe e (PMC)” shall be a Board constituted committee within the insurer with
functions as per these regulations.
(11) “Senior citizen” shall have the same meaning assigned to it under Maintenance and Welfare of Parents
and Senior Citizens Act, 2007.
(12) “Unique identif ication number (UIN)” means a unique number allotted to each product which is required
to be disclosed in product related literature, policy documents and any other supporting documents for
such product.
(13) “Use and file” means the procedure where the insure r is allowed to launch the product to market after
assignment of unique identification number (UIN) and without prior filing to the Authority.
(14) “Products” include base products and riders or add -ons.
(15) All words and expressions used herein and not defined in these regulations but defined in the Insurance
Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or
any Rules or Regulations made thereunder shall have the meanings respectively assigned to them in those
Acts or Rules or Regulations.
CHAPTER -II
PRINCIPLES OF PRODUCT DEVELOPMENT, PRICING AND DESIGN
4. Principles of design and pricing of insurance products:
(1) As part of product design and development cycle, every insurer shall ensure that:
a. evolving risk coverage needs of the customer are taken into account while developing new products
and revising existing products;
b. product covers an insurable risk with an underlying risk transfer;
c. the products offered are simple to understand and not complex;
d. there is transpa rency and clarity in wordings, terms, coverage, exclusions and conditions;
e. policyholder’s interests are protected;
f. the basic principles of insurance like insurable interest, indemnity, utmost good faith, proximate
cause, contribution clause, salvage and su brogation etc. are adhered to;
g. all the risks relevant to the products are appropriately considered in the pricing;
h. the premium rates are fair and not excessive, inadequate, unfairly discriminatory and provide value
for money;
i. all relevant factors such as r isk appetite, capital availability, claim experience, reinsurance costs,
guarantees, options are considered;
j. products are viable and self -sustainable;
k. market conduct practices are appropriate and fair;
l. appropriate systems, procedures relevant to the produc t, such as underwriting, pricing, reinsurance,
claims management are in place .
(2) Additionally , the products shall follow the applicable provisions set out as under:
a. Schedule I & III - Life insurance products;
b. Schedule II & III - General insurance products;
c. Schedule III - Health insurance products.
5. Micro -insurance products: Insurance products to be categorized as micro -insurance product along with
related provisions, as applicable, shall be specified by the Competent Authority from time to time.
6. Product mana gement and governance:
(1) Board approved policies and Product management committee (PMC):
a. Every insurer shall have in place Board approved policies covering all areas of product design,
underwriting, advertisements and overall management of the insurance pro ducts.
b. The Board constituted Product management committee shall be responsible for implementation of
the Board approved policies and ensuring:
i. adherence to principles of design and pricing of insurance products;
ii. appropriateness of the product design for the target market;
iii. regulatory compliance and recommending products for filing under File and use procedure,
as applicable;
iv. products falling under Use and file category are approved;
v. periodical review of product performance, market conduct issues including grievances and
taking up corrective actions, as may be necessary;
vi. modification or withdrawal of the product, if required;
vii. overall management of the insurance products;
viii. maintenance of documentation of the decisions taken for each product for inspections of the
Competent Authority .
c. All advertisements issued by the insurer and their distribution channels shall be approved through a
Board approved advertisement committee of some of the Key Management Persons (KMPs) and
one permanent invitee from PMC of the insu rer. The constitution of this committee shall be as
specified by the Competent Authority. The approvals may be granted by the committee
considering the expectations that may get created from such advertisements and possible market
conduct issues. These ap provals shall be in accordance with the specified framework and the
approvals given by the PMC on such products.
(2) System and control:
a. PMC shall recommend the launch of approved insurance products, only after ensuring that all the
processes, suitable infrast ructure, system requirements and standard operating procedures are in
place on an ongoing basis from policy issuance to claim settlement, including determination of
reserves & solvency margin and for seamless operations of the insurer including policyholde rs’
servicing on a day -to-day basis.
b. Insurers shall exercise prudent management and oversight of insurance products including
maintaining and implementing adequate controls.
c. Insurers shall put in place monitoring mechanism, systems and procedures to preve nt, identify
and mitigate frauds.
(3) Review of insurance products:
a. All products, offered for sale, shall be reviewed by Appointed Actuary at least once a year taking
into account:
i. the reasonable expectation of all stakeholders, including policyholders;
ii. financial viability of the products;
iii. emerging risks and experience under the products;
iv. any other relevant factors.
b. Appointed Actuary shall present the results of such review to the PMC and make suitable
recommendations for any modifications or withdrawa l of the product.
c. Any revision either of the premium rates or the corresponding benefits or both with respect to the
existing products shall be based on credible underlying experience of relevant risk parameters.
The revision shall also consider the an alysis of policyholders’ grievances and market feedback, if
any.
CHAPTER III
MISCELLANEOUS
7. Powers to issue circular, guidelines and directions from time to time:
(1) The Competent Authority may issue circulars, guidelines and directions, if necessary, from t ime to time,
relating to these regulations including, but not limited to, transitory provisions regarding implementation
process of these regulations, product approval process, categorization of products, any matter relating to
product design, standard pro ducts, combi -products, administration and overall management of products
including matters related to Product management committee and advertisement committee, withdrawal and
revision of products, migration and portability, market conduct, maintenance of r ecords, submission of
returns and statements, disclosure norms and other operational aspects including customer information
sheet.
(2) The Competent Authority may direct insurer to withdraw any product, if it is not in the interest of
policyholders or the insu rance industry.
8. Power to remove difficulties and issue clarifications :
In order to remove any doubts or difficulties that may arise in the application or interpretation of any of the
provisions of these regulations, the Competent Authority may issue approp riate clarifications or guidelines as
deemed necessary .
9. Repeal and Savings:
(1) The following regulations shall be repealed from the date these regulations come into force:
a. IRDAI (Micro Insurance) Regulations, 2015;
b. IRDAI (Minimum Limits for Annuities and othe r benefits) Regulations, 2015;
c. IRDAI (Acquisition of Surrender and Paid up values) Regulations, 2015;
d. IRDAI (Health Insurance) Regulations, 2016;
e. IRDAI (Unit Linked Insurance Products) Regulations, 2019;
f. IRDAI (Non -Linked Insurance Products) Regulations, 2 019;
(2) Other provisions which were in existence in the regulations mentioned under sub regulation (1) of
regulation 9 above and not mentioned in these regulations shall be provided separately by the circular
issued under provision of regulation 7 of these re gulations or under other applicable regulations specified
by the Authority as deemed necessary.
(3) Unless otherwise mentioned herein, nothing in these regulations shall be deemed to invalidate the
insurance contracts entered into prior to these regulations c oming into force.
DEBASISH PANDA , Chairperson
[ADVT. -III/4/Exty./ 862/2023 -24]
Schedule I: Specific provisions applicable to life insurance products (refer regulation 4)
1. Definitions:
A. General definitions:
1.1. “Death benefit” means the benefit which is payabl e on death of life assured, as stated in the policy
document.
1.2. “Grace period for other than single premium policies” means the time granted by the insurer from the
due date of payment of premium, without any penalty or late fee, during which time the policy is
considered to be in -force with the risk cover without any interruption, as per the terms & conditions
of the policy. The grace period for payment of the premium for all types of life insurance policies
shall be fifteen days, where the policyholder pays the premium on a monthly basis and 30 days in all
other cases.
1.3. “General annuity business” means the business of effecting contracts to pay annuities on human life
but does not include contracts under pension business.
1.4. “Group fund based products ” means pr oducts wherein a life insurer assures a return, whether
guaranteed or otherwise, on the corpus created through periodic or lump -sum contribution received
from the master policyholder and/or members of the group. The master policyholder is generally the
employer or trustee.
1.5. “Index linked insurance products” are the products where the benefits under the policy are directly
linked to a publicly available index.
1.6. “Non -Linked insurance products” are the products other than Linked insurance products.
1.7. "Non -par pro ducts" or "Products without participation in profits" means products where policies are
not entitled for any share in surplus (profits) during the term of the policy;
1.8. "Par products" or "Products with participation in profits" means products where policies are entitled
to share in surplus (profits) during the term of the policy as per section 49 of the Act.
1.9. “Pension business” means the business of effecting contracts under pension products or
superannuation scheme which may eventually lead to payment of annu ity under general annuity
business.
1.10. “Revival of a policy” means restoration of the policy, which was discontinued due to the non -
payment of premium, by the insurer with all the benefits mentioned in the policy document, with or
without rider benefits if a ny, upon the receipt of all the premiums due and other charges or late fee if
any, during the revival period, as per the terms and conditions of the policy, upon being satisfied as to
the continued insurability of the insured or policyholder on the basis o f the information, documents
and reports furnished by the policyholder, in accordance with Board approved underwriting policy.
1.11. “Rider” means the insurance cover(s) added to a base product for additional premium or charge.
1.12. “Rider benefits" means an amount of benefit payable on occurrence of a specified event covered
under the rider, and is an additional benefit to the benefit under the base product, and may include
waiver of premium benefit on other applicable riders.
1.13. “Savings products” means those produc ts other than “Pure risk products”.
1.14. “Sum assured on death” means an absolute amount of benefit which is guaranteed to become payable
on death of the life assured in accordance with the terms and conditions of the policy.
1.15. "Sum assured under health cover" means an absolute amount of benefit which is guaranteed to
become payable on happening of insured health related contingency in accordance with the terms and
conditions of the policy under health cover.
1.16. “Surrender" means complete withdrawal or termination o f the entire policy contract.
1.17. “Surrender value" means an amount, if any, that becomes payable on surrender of a policy during its
term, in accordance with the terms and conditions of the policy.
1.18. “Unit linked insurance products (ULIP)” are the products wher e the benefits are partially or wholly
dependent on the performance of the underlying assets under each of the segregated fund offered.
B. Definitions applicable to linked insurance products:
1.19. “Allocation” for linked insurance product means the process of allocating premium to create units, at
the prevailing unit price, in the segregated funds offered under the linked insurance product, as and
when the premiums are received or switches from one fund to another fund are made.
1.20. “Annualized premium” means the p remium amount payable in a year excluding taxes, rider
premiums and underwriting extra premium on riders, if any.
1.21. “Date of payment of premium” means the date on which premium payment is received by the insurer
in accordance with the provisions of Section 6 4 VB (2) of the Act.
1.22. “Discontinuance” means the state of a policy that could arise on account of surrender of the policy or
non-payment of the premium due before the expiry of the grace period.
1.23. “Discontinued policy fund” means the segregated fund of the insurer constituted by the fund value, as
applicable, of all the linked insurance policies discontinued during lock -in period.
1.24. “Lock -in period” means the period of five consecutive completed years from the date of
commencement of the policy, during which period the proceeds of the policies cannot be paid by the
insurer to the policyholder or to the insured, as the case may be, except in the case of death or upon
the happening of any other contingency covered under the policy.
1.25. “Net asset value (NAV)” means the price per unit of the segregated fund .
1.26. “Partial withdrawals” means any amount withdrawn partially out of unit fund by the policyholder
during the term of the policy.
1.27. “Premium re -direction” means an option which allows the policyholder to modify the a llocation of
amount of renewal premium to various segregated funds under a linked insurance policy.
1.28. “Revival period” means the period of three consecutive complete years from the date of first unpaid
premium.
1.29. “Segregated fund” means funds earmarked under l inked insurance business.
1.30. “Settlement option” means a facility made available to receive the maturity or death proceeds in
instalments in accordance with the terms and conditions stated in advance at the inception of the
contract.
1.31. “Switches” means a facil ity allowing the policyholder to move from one segregated fund, either
wholly or in part, to other segregated fund(s) amongst the segregated funds offered as per the terms
and conditions of the policy.
1.32. “Top -up premium” is an amount that is paid voluntarily by the policyholder besides contractual
premium and is treated as single premium for all purposes.
1.33. "Total premiums paid" means total of all the premiums received under the base product including
top-ups premium paid, if any.
1.34. “Unit” means a specific portio n or part of the underlying segregated linked fund which represents
policyholder’s entitlement in such funds.
1.35. “Unit fund value” means the summation of number of units in each segregated fund multiplied by the
net asset value (NAV) for respective segregat ed fund under that policy.
C. Definition applicable to non -linked insurance product:
1.36. “Annualized premium” shall be the premium amount payable in a year excluding taxes, rider
premiums, underwriting extra premiums and loadings for modal premiums.
1.37. "Maturity benefit" means sum assured on maturity, any additional and accrued benefit, which is
payable on maturity in accordance with the terms and conditions of the policy.
1.38. “Pure risk products” means insurance products (without any savings element) where the paymen t of
agreed amount is assured on the happening of death of life assured or on happening of insured health
related contingency within the term of the policy.
1.39. “Revival period” means the period of five consecutive complete years from the date of first unpaid
premium.
1.40. “Sum assured on maturity” means an absolute amount of benefit which is guaranteed to become
payable at the end of the policy term i.e. on maturity of the policy in accordance with the terms and
conditions of the policy.
1.41. "Total premiums paid" mean s total of all the premiums paid under the base product, excluding any
extra premium and taxes, if collected explicitly.
2. Product structure:
i) All insurance products offered by life insurers shall be categorized either under linked insurance
products or under non-linked insurance products.
ii) All linked insurance products shall further be categorized under:
a. Unit linked insurance products;
b. Index linked insurance products.
iii) All non -linked insurance products shall be further categorized under:
a. With participati on insurance products and the same may be referred to as Par products;
and
b. Without participation insurance products and the same may be referred to Non -Par
products.
IV) ALL LINKED INSURANCE PRODUCTS SHALL BE OFFERED UNDER NON -PAR
PRODUCT CATEGORY.
V) LIFE I NSURANCE PRODUCTS MAY BE OFFERED EITHER ON INDIVIDUAL BASIS OR
GROUP BASIS.
A. UNIT LINKED INSURANCE PRODUCTS:
i) Unit linked insurance products shall operate by offering one or more segregated funds,
wherein each segregated fund shall have well define d asset categorization along with its risk
profile.
ii) The premiums, net of allocation charges, if any, shall be utilised to allocate units in the
segregated funds chosen by the policyholder at its NAV.
iii) A Unit linked insurance policy shall offer one of the following death or health benefits:
a. the sum assured as agreed in the policy plus the balance in the unit fund;
b. the sum assured as agreed in the policy or the balance in the unit fund whichever is higher.
iv) Unit linked insurance products may have investment g uarantee. Such guarantee shall be
reasonable and consistent in relation to the current and long term interest rate scenario and
shall be priced appropriately. Any guarantee offered in the benefits under a unit linked
insurance product shall be at the produ ct level only and shall not be related to any of the
underlying funds.
v) NAV shall be determined for each of the segregated funds on a daily basis, based on the
performance of the underlying assets of such segregated funds. NAV shall be used for the
computat ion of benefits under the policy.
The NAV of each segregated fund shall be computed as:
(Market value of investment held by the fund + value of current assets – value of current
liabilities and provisions, if any)
_________________________________________ ________________
Number of units existing on valuation date (before creation / redemption of units)
Note: i) Value of current assets represents accrued interest, dividend receivable, bank
balance, receivable for sale of investments and other current asset s (for
investments).
ii) Value of current liabilities represents payable for investments.
iii) Number of units derived from the investment accounting system shall be reconciled
on a day to day basis with the policy administration system.
iv) P rovisions shall include expenses for brokerage and transaction cost, NPA, fund
management charges (FMC) and a ny other charges, as specified.
vi) Insurers shall explicitly specify charges, as applicable, subject to the following conditions:
a. use uniform definit ions for charges under all the unit linked insurance products in
accordance with these regulations.
b. Except for single premium products, the overall charges in all other unit linked insurance
products shall be distributed evenly during the lock -in period s uch that the:
i. Premium allocation charge and policy administration charge shall be spread evenly
during first 5 years of the policy contract, without wide fluctuations.
ii. Charges could change from year to year in a reasonably orderly manner so that the
differ ence between the maximum and minimum charges during first 5 years shall not
vary by more than 3 times.
iii. Charges during lock -in period shall be so structured such that the cap on net reduction
in yield is achieved without any further additions to fund value at any time during and
at the end of the first five years of the contract. Provided that this provision is
applicable to both single premium products and other than single premium products.
c. The charges levied under the unit linked insurance products shall be:
I. Premium allocation charge : This is a percentage of the premium appropriated
towards charges from the premium received. For unit linked insurance products,
the balance amount known as allocation rate constitutes that part of premium
which is utilized t o purchase the units of the fund in the policy. The percentage
shall be explicitly stated and could vary by the policy year in which the premium
is paid, the premium size and the premium type (regular, single or top -up
premium).
i. This is a charge levied at the time of receipt of premium.
ii. The Premium allocation charge is capped at 12.5% of annualized premium in
any year.
II. Fund management charge (FMC):
i. This charge is levied as a percentage of the value of assets and shall be
appropriated by adjusting the NAV.
ii. This is a charge levied at the time of computation of NAV, which is done on
daily basis.
iii. The cap on fund management charges in respect of each of the segregated
fund other than discontinued policy fund shall be 135 basis points per annum.
For discontinue d policy fund, the cap on fund management charge shall be 50
basis points per annum.
III. Guarantee charge:
i. This charge is levied as a percentage of the value of assets and shall be
appropriated by adjusting the NAV.
ii. This is a charge levied at the time of com putation of NAV, which is usually
done on daily basis.
iii. The cap on guarantee charges shall be 50 basis points.
IV. Policy administration charge : This charge shall represent the expenses other
than those covered by premium allocation charges and the fund managem ent
charge. This is a charge which may be expressed as a fixed amount or a
percentage of the premium or a percentage of sum assured.
i. This charge is levied at the beginning of each policy month from the unit fund
by cancelling units for equivalent amount.
ii. This charge could be flat throughout the policy term or vary at a pre -
determined rate of change not exceeding 5% per annum.
iii. The maximum policy administration charge that can be levied shall be
Rs.500 /- per month.
V. Surrender charge or discontinuance charge:
i. This is a charge levied on the unit fund for individual unit linked insurance
products where the policyholder opts for surrender or on discontinuance of
the contract as stipulated under these regulations.
ii. This charge is usually expressed either as a perce ntage of the fund or as a
percentage of the annualized premiums (for regular premium contracts).
iii. No discontinuance charge shall be imposed on top -up premiums.
iv. The charges levied on the date of discontinuance (as a percentage of fund
value or one annualized premium or a percentage of single premium) shall not
exceed the following limits:
For annual premiums policies:
Where the policy is
discontinued during
the policy year Maximum discontinuance charges for
the policies having annualized
premium up to Rs. 50 ,000/ - Maximum discontinuance charges for
the policies having annualized premium
above Rs. 50,000/ -
1 Lower of 20% * (AP or FV) subject to
a maximum of Rs. 3,000/ - Lower of 6% * (AP or FV) subject to a
maximum of Rs. 6,000/ -
2 Lower of 15% * (AP or FV) s ubject to
a maximum of Rs. 2,000/ - Lower of 4% * (AP or FV) subject to a
maximum of Rs. 5,000/ -
3 Lower of 10% * (AP or FV) subject to
a maximum of Rs. 1,500/ - Lower of 3% * (AP or FV) subject to a
maximum of Rs. 4,000/ -
4 Lower of 5% * (AP or FV) subjec t to
a maximum of Rs. 1,000/ - Lower of 2% * (AP or FV) subject
maximum of Rs. 2,000/ -
5 and onwards Nil Nil
For single premium policies:
Where the policy is
discontinued during
the policy year Maximum discontinuance charges
for the policies having sing le
premium up to Rs. 3,00,000/ - Maximum discontinuance charges for the
policies having single premium above Rs.
3,00,000/ -
1 Lower of 2% *(SP or FV) subject to
a maximum of Rs.3,000/ - Lower of 1% *(SP or FV) subject to a
maximum of Rs.6,000/ -
2 Lower of 1.5% *(SP or FV) subject
to a maximum of Rs. 2,000/ - Lower of 0.70% *(SP or FV) subject to a
maximum of Rs. 5,000/ -
3 Lower of 1% *(SP or FV) subject to
a maximum of Rs.1,500/ - Lower of 0.50%* (SP or FV) subject to a
maximum of Rs. 4,000/ -
4 Lower of 0.5 % *(SP or FV) subject
to a maximum of Rs. 1,000/ - Lower of 0.35% *(SP or FV) subject to a
maximum of Rs. 2,000/ -
5 and onwards Nil Nil
AP- Annualized premium
SP-Single premium
FV- Fund value
VI. Switching charge : This is a charge levied on switching fr om one segregated fund
to another available within the product. The charge per each switch, if any, shall
be levied at the time of executing the switch. The maximum switching charge
shall be Rs.500 per switch.
VII. Mortality or morbidity charge: This is the cos t of life or health insurance cover.
It is exclusive of any expense loadings and is levied by cancellation of units. This
charge, if any, shall be levied at the beginning of each policy month from the
fund.
i. The method of computation shall be explicitly sta ted in the policy document.
The mortality or morbidity charge table shall form part of the policy
document.
ii. Mortality charge table shall be guaranteed during the contract period.
iii. The mortality or morbidity charge for the mortality or morbidity risk covere d
shall:
a. only reflect the pure risk charges for the cover offered and shall not
include any allowance for expenses or any other parameters;
b. be reasonable and consistent with the specified mortality tables or
morbidity tables, if any;
c. be demonstrated with the support of insurer’s own experience, wherever
applicable;
d. be expressed as per Rs. 1,000/ - sum at risk for each age.
VIII. Rider charge or rider premium :
i. In case rider is attached to a unit linked insurance product, the cost of such
rider cover shall be levi ed either through rider charge or level rider premium,
but not both. This should be explicitly mentioned in policy document and
other product filing documents, as the case may be.
ii. The cost of rider cover can be levied through level rider premium provided :
a. the rider premium does not contain any expense loading; and
b. the premium payment term and policy term of the riders are consistent
with premium payment term and policy term of the base unit linked
insurance product; and
c. the level rider premium shall be le vied in addition to the base premium.
iii. In case the rider cost is levied through charge, such charges shall be exclusive
of expense loadings and levied separately to cover the cost of rider benefit.
The rider charge, if any, shall be levied by cancellation o f units. This charge
is levied at the beginning of each policy month from the fund. The rider
charge table shall form part of the policy document. The rider charge shall be
expressed as per Rs. 1,000 /- sum assured for each age
IX. Partial withdrawal charge: This is a charge levied on the unit fund at the time of
partial withdrawal of the fund during the contract period. The maximum partial
withdrawal charge shall be Rs.500 /- per transaction.
X. Miscellaneous charge:
i. This is a charge levied for any alterations wit hin the contract, such as,
increase in sum assured, premium redirection, change in policy term etc. This
charge shall be expressed as a flat amount. This charge shall be levied by
cancellation of units.
ii. This charge is levied only at the time of alteration. The maximum
miscellaneous charge shall be Rs.500 /- per alteration.
XI. Other conditions on charges:
i. The charges mentioned herein shall not be modified or changed without
obtaining appropriate approval.
ii. All the charges, where upper limit is mentioned in claus e 2(A)(vi)(c) of this
schedule, may be modified within the upper limits, with supporting data after
obtaining appropriate approval.
iii. The systems and processes for managing unit funds, computation of NAV,
calculation of units and deduction of charges shall b e reviewed once in a
financial year by the insurer.
XII. Before launch of a product, insurers shall ensure the reduction in yield i.e.
difference between gross and net yield, for policies, does not exceed the limits
mentioned in the table below:
Number of years completed since inception Maximum permissible reduction in yield (% per
annum)
5 4.00%
6 3.75%
7 3.50%
8 3.30%
9 3.15%
10 3.00%
11 and 12 2.75%
13 and 14 2.50%
15 and thereafter 2.25%
i. The equation of value, considering the premiums paid by poli cyholder and the
fund value projected with gross rate of returns 6%, 8% and 10% per annum
for each policy year under demonstration, shall give the effective net yield per
annum expected to be earned on the contract at the point of sale. The
projection of f und shall consider all the charges. However, charges for
mortality, morbidity, cost of rider benefits, investment guarantee, tax on
charges (as applicable) and extra premium due to underwriting emanating
from extraordinary health conditions may be excluded in the calculation of
the net yield.
ii. The policyholders’ options such as partial withdrawals, premium redirection,
switches, settlement options, top up premium, which affect the net yield, shall
not be considered for the demonstration of reduction yield.
vii) Discontinued policy fund :
Each insurer shall have three separate discontinued policy funds: one for all pension
products, one for all life insurance products and one for all health insurance products. Each
of these funds shall comprise of all the disconti nued policy funds of all the policies offered
under the respective unit linked insurance products. Only fund management charges shall be
applicable on such funds.
viii) Minimum guaranteed interest rate :
(a) The minimum guaranteed interest rate applicable to the dis continued fund shall be
specified by the Competent Authority from time to time.
(b) The excess income earned in the discontinued fund over and above the minimum
guaranteed interest rate shall also be apportioned to the discontinued policy fund in
arriving at the proceeds of the discontinued policies and shall not be made available to
the shareholders.
ix) The maturity benefit shall be at least equal to the balance in the unit fund value available on
the date of maturity.
B. INDEX LINKED INSURANCE PRODUCT:
a. The insurer shall ensure compliance with the principles of transparency, simplicity,
fairness, awareness and liquidity of indices.
b. The NAV shall be linked to underlying publicly available index. All other provisions of
unit linked insurance products shall be applicab le in mutatis mutandis to index linked
insurance products.
C. NON -LINKED INSURANCE PRODUCTS:
a. Under non -linked par products, the maturity benefits shall closely reflect the asset share
and the bonus accruals during the term shall be as follows:
i. regular bonus s hall be declared only on an annual basis;
ii. interim bonus shall be declared at the annual valuation period, which shall
become payable during the inter -valuation period.
iii. terminal bonus or other forms of bonus, if any, shall become payable on the
specified ev ents or at the end of the term of the policy.
b. Under non -linked non par individual savings products, the benefit shall be guaranteed in
terms of an absolute amount at the inception of policy.
c. In case of savings products, other than term insurance product w ith return of premium,
survival benefits including maturity benefit shall result in at least non -zero positive return
to the policyholder.
D. PENSION PRODUCTS:
a. Pension products may be offered either under linked insurance product or non -linked
insurance produ ct.
b. Pension products offered to individuals shall:
i) have explicitly defined assured benefit that is payable either on death or on any
health contingency, if covered;
ii) have explicitly defined assured benefit that is payable on vesting under non -linked
product s;
iii) be optional to offer the assured benefit in case of vesting for Linked Insurance
Products.
c. The benefit under the pension products shall be utilized on the date of vesting or surrender
or death, as per the policy terms and conditions.
d. For all group fun d based non -linked pension products under defined benefits scheme,
subscribed by an employer, there shall be an assured benefit that is available on death of a
member.
e. For all group fund based non -linked pension products with the defined contributions
scheme, subscribed by an employer where the scheme maintains individual member
accounts, there shall be an assured benefit that shall be applicable on each of such
individual accounts.
f. An assured benefit means at least one of the guarantees from the followin g options:
i) non-zero positive rate of return on the premiums paid, excluding applicable tax,
from the date of payment to date of vesting; or
ii) an absolute amount to be paid on death or maturity or health contingency (which
shall result in non -zero positive re turn).
E. ANNUITY PRODUCTS INCLUDE IMMEDIATE ANNUITY AND DEFERRED ANNUITIES
WHEREIN UNDERLYING ANNUITY SHALL BE GUARANTEED FOR LIFE. ANNUITY PAYMENTS
MAY VARY WITH A PUBLICLY AVAILABLE BENCHMARK SUBJECT TO CONDITIONS AS MAY
BE SPECIFIED BY THE COMPETENT AUTHO RITY .
3. Minimum sum assured :
For all life insurance products, the minimum sum assured on death or minimum sum assured under health
cover, as applicable during the entire term of the policy, shall not be less than as mentioned herein:
Minimum Sum Assured
Age at Entry Single Premium Regular Premium and Limited
Premium
Less than 50 years 1.25 times of single premium 7 times the annualized premium
50 years and above 1.10 times of single premium 5 times the annualized premium
The provision of the minimum Sum Assured shall not be applicable to reduced paid -up policies, pension
products, annuity products, decreasing cover pure risk products and group fund based products .
The multiples mentioned in this clause are minimum and insurers should also offer high er multiple(s) to
policyholders. These higher multiples shall be in accordance with the risk appetite and Board approved
underw riting policies of the insurer.
The minimum death benefit or health cover for all life insurance products other than single premi um shall be
at least 105% (one hundred and five percent) of the total premiums paid up to the date of occurrence of
covered contingency, except for immediate annuity products and group fund based products .
4. Surrender value:
The surrender value shall be deri ved using generally accepted actuarial principles, including but not limited
to:
(1) The policyholders are treated equitably at the time of surrender.
(2) The surrender value payable shall be fair and reasonable to the policyholders.
(3) Surrender value shall follow a smooth progression and shall be close to the expected maturity value
towards the end of the policy term.
(4) As part of the product design, insurers may offer higher surrender value than the minimum guaranteed
surrender values for the products referred in cl ause 4 (A) (a) of this schedule .
(5) Special surrender value factors for the calculation of the special surrender values shall be based on the
asset share or notional asset share, as applicable, and for the purpose of such asset share computation:
(i) The computa tion of asset share shall be as per the prevailing Guidance Note or Actuarial
Practice Standard issued by the Institute of Actuaries of India from time to time.
(ii) The notional asset share calculation shall also be consistent with the principles set out in t he
Guidance Note or Actuarial Practice Standard, subject to:
(a) expenses being consistent with the pricing basis. However, the expenses shall not exceed
the applicable limits specified in the Insurance Regulatory and Development Authority of
India (Expenses o f Management, including Commission, of Insurers) Regulations, 2024
and,
(b) interest rate shall not be less than the “pricing interest rate less 50 basis points (bps)”.
(6) Insurers shall enhance the disclosures and improve transparency in the sales process by ens uring the
following additional measures:
(i) The customer is informed regarding all the terms and conditions of the policy in detail
including those related to the lapse and surrender of the policy.
(ii) Customised benefit illustrations shall incorporate surrender values and shall be signed by
the prospective policyholder as well as the insurance agent or authorized person of
intermediary or such other distribution channel, as may be specified by the Competent
Authority, or authorized person of the insurer involved in sales process, as the case may be,
to enable the customer to understand the benefits under the policy including guaranteed and
special surrender values across all durations and to take an informed decision at the point of
sale.
A. Surrender value under non-linked insurance products:
a) All individual non -linked savings and protection oriented products such as non -linked life insurance
products, and non -linked pension products including deferred annuity products, other than pure risk
products and immediate annu ity products, shall acquire a guaranteed surrender value.
(1) Other than single premium products: The policy shall acquire a guaranteed surrender value on
payment of premium for at least two consecutive years. The guaranteed surrender value shall be at
least:
i. 30% of the total premiums paid less any survival benefits already paid, if surrendered during
the second year of the policy.
ii. 35% of the total premiums paid less any survival benefits already paid, if surrendered during
third year of the policy.
iii. 50% of t he total premiums paid less any survival benefits already paid, if surrendered
between the fourth year and seventh year of the policy, both years inclusive.
iv. 90% of the total premiums paid less any survival benefits already paid, if surrendered during
the last two years of the policy provided the surrender value beyond the seventh year shall
follow a smooth progression and converge to at least 90% of the total premiums paid less any
survival benefits already paid, as the policy approaches maturity.
(2) Single premium products: The guaranteed surrender value shall be at least:
i. 75% of the total premiums paid less any survival benefits already paid, if surrendered any
time within third policy year.
ii. Subject to (iii), 90% of the total premiums paid less any surviva l benefits already paid, if
surrendered in the fourth policy year.
iii. 90% of the total premiums paid less any survival benefits already paid, if surrendered during
the last two years of the policy provided the surrender value beyond the fourth year shall
follow a smooth progression and converge to at least 90% of the total premium paid less any
survival benefits already paid, as the policy approaches maturity.
(3) The surrender value of the any subsisting bonus and any accrued guaranteed additions shall be
added to the guaranteed surrender value.
(4) The special surrender value shall represent the asset share in case of the par policies, where the asset
share shall be determined in accordance with the Guidance Note or Actuarial Practice Standards
issued by the Institu te of Actuaries of India. For non -par savings policies, the special surrender
value shall reflect the notional asset share, guaranteed maturity or survival benefits under the policy.
(5) The surrender value shall be the higher of the:
a) surrender value as calcul ated in accordance with clauses 4(A)(a)(1),4(A)(a)(2) and 4(A)(a)(3) of
this schedule ; or
b) the special surrender value.
(6) A policy which has acquired a surrender value shall not lapse by reason of the non -payment of
further premiums but shall be kept in -force to the extent of the paid -up sum assured and the
subsisting reversionary bonuses including guaranteed addition, if any, except for policies whose
paid up sum assured is less than the amounts mentioned in clause 4(A)(a)(8) of this schedule .
(7) For other than single premium policies, the paid up sum assured (before inclusion of reversionary
bonuses or the guaranteed additions, if any):
i. On death or for health cover: shall not be less than the amount arrived as the ratio of the total
period for which premiums ha ve already been paid bears to the maximum period for which
premiums were originally payable multiplied by the “Sum assured on death” or “Sum assured
under health cover”, as applicable.
ii. On maturity: shall not be less than amount arrived as the ratio of the total period for which
premiums have already been paid bears to the maximum period for which premiums were
originally payable multiplied by the sum assured on maturity.
iii. Adjustment may be made to the paid up sum assured calculated as above on account of
survival benefits paid, if any.
(8) Clause 4(A)(a)(6) of this schedule shall not apply where the paid up sum assured:
i. of the policy exclusive of attached bonuses and the guaranteed additions, if any, (other than
micro insurance business) is less than rupees two t housand five hundred.
ii. of the policy exclusive of attached bonuses and the guaranteed additions, if any, under micro
insurance business is less than rupees five hundred.
iii. takes the form of an annuity of less than rupees two hundred fifty per month.
(9) In case t he paid up sum assured of a policy is less than as mentioned in clause 4(A)(a)(8) of this
schedule , policy may be terminated after expiry of revival period by paying the surrender value.
b) The group fund based products may levy a surrender charge not exceedi ng 0.05 per cent of the total fund
value with a maximum cap of rupees five lakh (Rs.5,00,000/ -), if the policy is surrendered within third
annual renewal of the policy.
B. Surrender value under linked insurance policy:
a) All individual linked insurance and pen sion products shall acquire surrender value in the following
manner:
(1) Discontinuance of policy during the lock -in period : On surrender during the lock -in period, the
unit fund value after deducting applicable discontinuance charges shall be credited to the
discontinuance policy fund and risk cover and rider cover, if any, shall cease. The proceeds of the
discontinuance policy fund shall become payable at the end of the lock -in period.
(2) Discontinuance of policy after the lock -in-period :
i. In case of surrender of policy, the surrender value shall be at least equal to the unit fund value
as on the date of surrender.
ii. Upon expiry of the grace period, in case of discontinuance of policy due to non -payment of
premium, for other than single premium policies, the policy shall be converted into a reduced
paid up policy with the paid -up sum assured i.e. original sum assured multiplied by a ratio of
“total period for which premiums have already been paid” to the “maximum period for which
premiums were originally payable” as per the terms and conditions of the policy. The policy
shall continue to be in reduced paid -up status without rider cover, if any. All charges as per
terms and conditions of the policy may be deducted during the revival period. However, the
mortality cha rges shall be deducted based on the reduced paid up sum assured only. In case the
policyholder does not surrender or revive the policy within the revival period, the policy will
continue to be in reduced paid up status. At the end of the revival period the proceeds of the
policy fund shall be paid to the policyholder and the policy shall terminate.
b) The group unit linked insurance products may levy a surrender charge not exceeding 0.05 per cent of
the fund, with a maximum cap of rupees five lakh (Rs. 5,00,00 0/-), if the policy is surrendered within
the third renewal of the policy.
5. Minimum benefit:
No life insurer shall pay or undertake to pay an amount of benefit excluding any profit or bonus on policy of
insurance, which is less than the following:
i. annuity of rupees one thousand (Rs. 1,000 /-) per month, for policies for other than Government
sponsored insurance scheme and National Pension Schemes where annuity shall be as per respective
scheme;
ii. gross sum of rupees ten thousand (Rs. 10,000 /-) except under mic ro-insurance;
iii. gross sum of rupees five thousand (Rs. 5,000 /-) for micro -insurance.
Provided that this shall not prevent any insurer from converting any policy into a paid -up policy of any value
or payment of surrender value of any amount.
The Competent Aut hority may, however, approve annuities and other benefits lower than the amount
mentioned in this clause und er extraordinary circumstances.
Schedule -II: Specific provisions applicable to general insurance products (refer regulation 4)
1. Definitions:
(a) “Commerc ial product” is a general insurance product that is designed for other than individuals or
households.
(b) “Known accumulation” shall mean the combined exposure of insured risks or insured interests that
would in all likelihood be impacted by a loss occurrenc e. “Known accumulation” shall bear the same
meaning as may be expressly stated or may be inferred from the underwriting guidelines of the insurer
and/or relevant reinsurance treaty agreement defining or setting general guidelines on single risk and/ or
one accumulation.
(c) “Large risk” is a single exposure (Single risk or Known accumulation) that exceeds the Underwriting
capacity of the insurer .
(d) “Retail product” is an insurance product designed for individuals or households as also for micro or
small businesse s.
(e) “Single risk” shall mean one risk assessed as such and shall include one Known accumulation of risks as
defined by the underwriting guidelines of the insurer and which definition shall be aligned to that
specified in the terms and conditions of the Trea ty Reinsurance protection arrangement of the insurer
applying to the Line(s) of Business and/or Product.
(f) “Underwriting capacity” means the largest monetary amount of a Single risk that an insurer can assume
with the support of Treaty Reinsurance protecti on.
2. Classification of Products:
General insurance products shall be classified into two categories viz. Retail products and Commercial
products.
3. Large Risks:
Any large risk shall be underwritten only with the prior approval of the Risk Management Committe e
(RMC) .
Schedule III: Specific provisions applicable to health insurance products (refer regulation 4)
1. Definitions :
1.1. “AYUSH treatment” refers to the medical and / or hospitalization treatments given under Ayurveda,
Yoga and Naturopathy, Unani, Siddha and Homeopathy systems.
1.2. “Break in policy” means the period of gap that occurs at the end of the existing policy
term/installment premium due date, when the premium due for renewal on a given policy or
installment premium due is not paid on or before the premiu m renewal date or grace period.
1.3. “Grace period ” means the specified period of time, immediately following the premium due date
during which premium payment can be made to renew or continue a policy in force without loss of
continuity benefits pertaining to waiting periods and coverage of pre -existing diseases. Coverage
need not be available during the period for which no premium is received. The grace period for
payment of the premium for all types of insurance policies shall be: fifteen days where premium
payment mode is monthly and thirty days in all other cases.
Provided the insurers shall offer coverage during the grace period, if the premium is paid in
instalments during the policy period.
1.4. “Migration” means a facility provided to policyholders (including all members under family cover
and group policies), to transfer the credits gained for pre -existing diseases and specific waiting
periods from one health insurance policy to another with the same insurer.
1.5. “Portability” means a facility provided to the hea lth insurance policyholders (including all members
under family cover), to transfer the credits gained for, pre -existing diseases and specific waiting
periods from one insurer to another insurer.
1.6. “Pre-existing disease (PED )” means any condition, ailment, injury or disease :
a) that is/are diagnosed by a physician not more than 36 months prior to the date of commencement
of the policy issued by the insurer; or
b) for which medical advice or treatment was recommended by, or received from, a physician, not
more than 36 months prior to the date of commencement of the policy.
Provided that the definition of the pre -existing disease shall not be applicable for Overseas Travel Policies.
Life insurers may define norms for applicability of PED at reinstatement.
1.7. “Specific waiting period” means a period up to 36 months from the commencement of a health
insurance policy during which period specified diseases/treatments (except due to an accident) are not
covered. On completion of the period, diseases/treatments shal l be covered provided the policy has
been continuously renewed without any break.
2. Classification of products:
For the purpose of these regulations, health insurance products shall be classified into either indemnity or
benefit based products and may be of fered to individual or families or groups.
2.1. Types of policies:
2.1.1 Indemnity based health insurance policy means an insurance policy that compensates an
insured for the loss due to occurrence of an insured event as specified in the policy.
2.1.2 Benefit based health insurance policy means an insurance policy that pays fixed amount on
the occurrence of an insured event as specified in the policy.
3. Scope of health insurance business:
3.1. General insurers and health insurers may offer individual and group health insurance pr oducts on either
indemnity and/or benefit basis.
3.2. Life insurers may offer individual and group health insurance products on benefit basis. Life insurers
may also offer health insurance product under unit linked platform.
Provided that a life insurer shall n ot offer indemnity based products either individual or group.
3.3. Credit linked products can be offered up to the loan period not exceeding five years.
3.4. Overseas or domestic travel insurance policies may only be offered by general insurers and health
insurers.
3.5. Health insurance products of life insurers shall also be subject to the provisions in the Schedule I of
these regulations, wherever applicable .
4. Pricing:
4.1 Premium shall remain unchanged for the policy term. Insurers may offer facility of premium payment in
instalment.
4.2 Insurers may devise mechanism(s) or incentive(s) to reward policyholders for early entry, continued
renewals, favourable claims experience, preventive and wellness habits and disclose upfront such
mechanism or incentives in the prospectus and t he policy document. Provided that what is proposed to be
covered as part of wellness and preventive habits be clearly defined in each and every product.
5. AYUSH coverage:
Insurers shall have a Board approved policy for providing AYUSH coverage, which interal ia, shall include
their approach towards placing AYUSH treatments at par with other treatments for the purpose of health
insurance so as to provide an option for the policyholders to choose treatment of their choice.
6. Product design:
6.1 Insurers shall ensure that they offer health insurance products to cater to all the age groups.
6.2 Insurers may design products specifically for senior citizens, students, children, maternity and any other
group as specified by the Competent Authority.
6.3 Insurers shall endeavor to offer coverage for persons with all types of existing medical conditions.
7. Pre-existing diseases and specific waiting period:
Waiting period for pre -existing diseases disclosed by the persons to be insured, shall be maximum up to 36
months of continuous c overage under the Health Insurance policy. Insurers may endeavor to have lesser pre -
existing disease waiting period and specific waiting period in the health insurance products.
Provided that the above waiting period norm of pre -existing disease shall not be applicable for Overseas
Travel Policies.
8. Moratorium (applicable for health insurance policies issued by general and health insurers):
After completion of sixty continuous months of coverage (including portability and migration) in health
insurance pol icy, no policy and claim shall be contestable by the insurer on grounds of non -disclosure,
misrepresentation, except on grounds of established fraud . This period of sixty continuous months is called as
moratorium period. The moratorium would be applicable for the sums insured of the first policy. Wherever,
the sum insured is enhanced, completion of sixty continuous months would be applicable from the date of
enhancement of sums insured only on the enhanced limits.
9. Renewal of health policies issued by gen eral insurers and health insurers (not applicable for travel and
personal accident policies):
9.1 A health insurance policy shall be renewable except on grounds of established fraud or non -disclosure or
misrepresentation by the insured, provided the policy is not withdrawn and also subject to conditions stated
at clause 8 of this schedule.
9.2 An insurer shall not deny the renewal of a health insurance policy on the ground that the insured had made a
claim or claims in the preceding policy years, except for benefit based policies where the policy terminates
following payment of the benefit covered under the policy like critical illness policy.
9.3 The insurer shall condone a delay in renewal up to the grace period from the due date of renewal without
conside ring such condonation as a break in policy.
9.4 For individual products, the loadings on renewal premium shall be at portfolio and not based upon any
individual policy claim experience. However, discount in premium may be provided by insurers to
individua l policyholders for good claims experience.
9.5 No insurer shall resort to fresh underwriting by calling for medical examination, fresh proposal form etc. at
renewal stage where there is no change in sum insured offered. Provided that where there is an
improvement in the risk profile, the insurer may endeavour to recognize that for removal of loadings at the
point of renewal.
10. Migration and portability of health insurance policy:
10.1 General insurers and health insurers offering indemnity based health ins urance policy except Personal
Accident and Travel Policies, shall provide an option of migration to an alternative health insurance product
to the extent of the sum insured and the benefits available in the previous policy. The insurer may underwrite
the proposal in case of migration, if the insured is not contin uously covered for 36 months.
10.2 All indemnity based health insurance policies issued by general and health insurers except Personal Accident
and Travel Policies, shall allow the portability of policies to the extent of the sum insured and the benefits
available in the previous policy, irrespective of individual or group policy subject to the Board approved
under writing policy of the insurers.
10.3 Life insurers may allow portability, wherever p ossible, as per the policy terms.
11. Special provisions for senior citizens:
All insurers shall establish a separate channel to address the health insurance related claims and grievances of
senior citizens. The details of such channel shall be available in th e website of the insurers.
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