Soon, you will be able to buy rider benefits such as accidental death and disability, critical illness or waiver of premium covers even if you own a life insurance policy that was subsequently withdrawn by your life insurer.
So far, the Insurance Regulatory and Development Authority of India (IRDAI) rules did not allow life insurance companies to make changes to their old, withdrawn products. Now, the insurance regulator has changed its stance.
“The key objective of this circular is to provide greater flexibility to existing policyholders while safeguarding their interests. The decision follows consultation with the Life Insurance Council…with this initiative, IRDAI reaffirms its dedication to policyholders by offering greater flexibility and enhancing policyholders' insurance experiences,” IRDAI said.
New features under old policies
The move will offer additional options to policyholders who may want to enhance their policies’ comprehensiveness. “Despite being not open for sale, these products still affect all the existing policyholders who would have bought these products when they were being actively sold. Hence, it makes absolute sense to allow certain basic changes to be made to these products so that the existing policyholders can avail those if needed and yield benefits from them,” says Akshay Dhand, Appointed Actuary, Canara HSBC Life Insurance.
Besides rider benefits, life insurance companies can also allow policyholders to alter premium payment modes – for instance, if only yearly premium payment was allowed earlier, insurers could allow the flexibility to pay monthly premiums.
“The changes will largely be in the nature of operational benefits – for instance, if the existing product only permitted yearly mode of premium payments, insurers can now also offer monthly or quarterly modes. Likewise, they can also modify (but not add) income payout options from, say, annual mode to monthly mode,” says a Bajaj Allianz Life Insurance spokesperson.
Insurance companies have also been permitted to reduce the rate of interest applicable to loans under the products or for reviving lapsed policies.
To be sure, insurers do not have to mandatorily offer these changes, nor do policyholders have any obligation to purchase them. “These are not mandatory in nature and can be made as and when the insurers feel that these will benefit existing policyholders of those withdrawn products,” adds Dhand.
Take your pick after evaluating premiums, your financial needs
The insurers will make modifications and offer them to older policyholders. They have to obtain specific requests from policyholders seeking the modified benefits.
As a policyholder, you can also approach your insurer if you feel the need to make such changes to your policy. If you are opting for a rider benefit, you might have to go through the risk evaluation process, depending on the insurer’s policy.
For example, if you are opting for a critical illness rider, the insurer might ask you to sign a declaration stating that you do not have any pre-existing illnesses or ask you to undergo medical check-ups. You can take your decision after receiving a premium quote from your life insurance company.
On the other hand, if the insurers’ rider products do not necessitate a fresh round of underwriting (risk assessment), you may not need to.