30 more days to pay life insurance premium

Applies to policies due this month

06/04/2020, SPECIAL CORRESPONDENT,HYDERABAD

IRDAI may offer settlement options for maturity payout of unit-linked policies.Jirsak

The Insurance Regulatory and Development Authority of India (IRDAI) has allowed an additional 30-day grace period for policyholders to pay premium on life insurance policies whose renewal due date falls in April.

It had earlier provided a similar grace period for those policies whose premium was due for payment in March.

An additional grace period is over and above the 30-day grace period, from the due date, that usually is available to pay the premium without any interest charges and thus ensuring continuity of the policy without any break.

The grace period varies depending on the frequency of premium payment — it is less, usually 15 days, if the mode of payment is monthly and invariably 30 days for quarterly, half-yearly or yearly modes.

A circular issued by IRDAI Member (Life) K. Ganesh said the additional grace period for life insurance policies, whose premiums is due in March and April, would be 30 days. The communication, however, did not specify whether it will be applicable to all life insurance policies, irrespective of their frequency of payment.

Settlement options

The decision follows representations from life insurers and the Life Insurance Council, in which they had cited “various operational constraints and difficulties being faced by policyholders due to the lockdown,” in view of the pandemic.

In another instruction to life insurers, IRDAI said they may offer settlement options for maturity payout of unit-linked policies. Settlement option is a facility extended to ULIP holders to receive the maturity proceeds in instalments.

Regulatory returns

“Where unit-linked policies mature and fund value is to be paid in lump sum, life insurers may offer settlement options. This one-time option is regardless of whether such option exists or not in the specific product,” the circular said.

In doing so, life insurers have to “exercise all due care and diligence to explain clearly the possible downside risk of continued fluctuation of fund value based on daily NAV and clear consent has to be obtained from the policyholder. This is allowed for unit-linked policies maturing up to May 31,” the circular said.

IRDAI has given more time for insurers to file regulatory returns — 15 days for monthly returns; and 30 days for quarterly, half-yearly and yearly returns as well for Cybersecurity Audit. The additional time for filing regulatory returns is as on March 31, another circular said.