The Insurance Regulatory and Development Authority of India (IRDAI) periodically issues master circulars to bring significant changes and updates in the insurance sector, including life insurance, health insurance, and general insurance. On September 5, 2024, IRDAI issued a Revised Master Circular detailing important guidelines and changes aimed at improving the insurance experience for policyholders. This article will decode the key aspects of the circular, highlighting what is in store for you as an insurance policyholder.
Also see: IRDAI 5 Big Changes for 2024: all insurance customers and agents should know
Timely Issuance of Life Insurance Policies
One of the critical updates proposed in the master circular is the timely issuance of life insurance policies. According to IRDAI new guidelines, insurers must issue the policy within 15 days of accepting the proposal. This change ensures that the policyholder does not have to wait unnecessarily after the approval of their proposal. Moreover, if a medical examination is required due to existing health conditions, insurers are now prohibited from asking for premium deposits upfront. This modification helps prevent the inconvenience of having funds stuck with the insurer in case the policy is not accepted or a counter-offer is made.
Once the proposal is accepted, the following documents must be provided to the policyholder without any extra charge:
- Covering letter for the policy document with details of the free-look period.
- Policy document.
- Copy of the proposal form submitted by the policyholder.
- Copy of Benefit Illustration.
- Customer Information Sheet (CIS).
- Copy of the Need Analysis document under Suitability Assessment, if applicable.
- Any other product-specific document as required.
Also see: Which LIC plans will be available for sale from October 1, 2024
Mandatory Customer Information Sheet (CIS)
The Customer Information Sheet (CIS) is now a mandatory part of all life insurance policies. CIS provides a summary of the policy in simple language, outlining essential details such as coverage, benefits, exclusions, and claim procedures. This document ensures transparency and helps policyholders understand what is covered and what is not. Key elements included in the CIS are:
- Type of insurance (e.g., whole life, term insurance, endowment, money back).
- Sum insured and coverage details.
- summary of exclusions which policy does not cover
- sub-limits (a pre-defined limit above which insurer will not pay)
- deductibles (specified amount upto which an insurer will not pay any claim/which will be deducted from total claim, if the claim amount is more than the specified amount), co-payment
- Waiting period (time period during which specified diseases/treatments are not covered)
- Free-look period, grace period, policy renewal terms, loan availability, surrender conditions, and claim procedures.
This initiative aims to empower policyholders with clear and concise information, enabling them to make informed decisions.
Grievance Redressal Mechanism
The revised circular emphasizes the importance of grievance redressal mechanisms for policyholders. If a policyholder is dissatisfied with the resolution provided by customer care, they have the right to escalate the issue to a higher authority. The steps for grievance redressal will be clearly mentioned in the CIS, ensuring that policyholders are aware of the process to follow if they need to seek further assistance.
Free Look Period
IRDAI has also reiterated the importance of the free look period for life insurance policies. Policyholders are entitled to a 30-day free look period during which they can review their policy and decide if it meets their needs. If they are not satisfied, they can surrender the policy within this period and receive a full refund of the premium paid.
Claim Settlement Timelines
Timely claim settlement is crucial for maintaining policyholder trust. The revised circular sets specific timelines for different types of claims, ensuring quick and efficient processing:
- Death Claims (without investigation): Must be settled within 15 days of claim intimation.
- Death Claims (requiring investigation): Must be settled within 45 days of claim intimation. Previously, the timeline was 120 days, and this reduction ensures quicker settlements.
- Surrender and Partial Withdrawals: Must be processed within 7 days of receiving the request.
- Maturity Benefits, Survival Benefits, Annuity Payouts, Income Benefits, etc.: Must be paid on the due date.
If the insurer fails to settle claims within the stipulated time, they will be liable to pay the bank rate plus 2% as a penalty to the beneficiary.
Mandatory Nomination
Nomination is now a mandatory requirement for all life insurance policies. This ensures that the policy benefits are paid to the designated nominee in the event of the policyholder’s death. Policyholders can appoint more than one nominee, providing flexibility and clarity in the distribution of benefits.
Customer Information Sheet (CIS) for Health Insurance
Similar to life insurance, health insurance policies must also include a CIS, detailing the coverage, benefits, and exclusions in simple language. Key elements of the CIS for health insurance include:
- Type of insurance (individual, family floater, etc.).
- Sum insured and coverage details.
- Exclusions and deductibles.
- Waiting periods for various conditions.
- Free-look period, policy renewal terms, and grace period.
The inclusion of CIS in health insurance aims to make policy terms easily understandable, reducing confusion at the time of claim.
Quick Settlement of Cashless Claims
For health insurance, the revised circular mandates that cashless claims must be settled within 3 hours of receiving the final discharge papers from the hospital. In the unfortunate event of a death during hospitalization, the insurer must expedite the claim settlement and assist in the transfer of mortal remains. If the insurer delays beyond 3 hours without a valid reason, they will be penalized, and the hospital cannot charge additional fees to the policyholder.
Coordination of Multiple Health Insurance Policies
Many policyholders have more than one health insurance policy, such as a corporate policy combined with a personal super top-up plan. The new guidelines clarify that policyholders can choose which policy to use as the primary policy for a claim. Insurers must coordinate among themselves to settle the claim seamlessly, preventing the need for reimbursement claims and ensuring a streamlined, cashless process.
Inclusive Insurance Products
IRDAI has instructed insurers to develop products that cater to all ages, medical conditions, and treatment types, including mental health, chronic conditions, and allopathy, AYUSH, and other medical systems. The goal is to ensure that every household has adequate insurance coverage by 2047, aligning with IRDAI vision of an insured India. Insurers must also ensure compliance with various laws, including:
- The Mental Healthcare Act, 2017.
- The Rights of Persons with Disabilities Act, 2016.
- The Surrogacy (Regulation) Act, 2021.
- The Transgender Persons (Protection of Rights) Act, 2019.
- The HIV and AIDS (Prevention and Control) Act, 2017.
Conclusion
The revised master circular issued by IRDAI on September 5, 2024, introduces significant changes to the insurance landscape, focusing on transparency, timely services, and inclusive insurance products. These changes are designed to address the pain points faced by policyholders and ensure that insurance policies deliver on their promises, providing much-needed financial security and peace of mind. As a policyholder, staying informed about these updates empowers you to make better decisions and take full advantage of the protections offered under your insurance policies.
Also see:
- IRDAI New Circular for Life Insurance
- IRDAI New Guidelines for LIC
- IRDAI New Guidelines for General Insuranc
- IRDAI New Guidelines for Health Insurance Companies
FAQs
What is the IRDAI Master Circular, and why is it important for policyholders?
The IRDAI Master Circular is a set of guidelines issued periodically by the Insurance Regulatory and Development Authority of India (IRDAI) to streamline and update regulations related to insurance policies. These guidelines aim to protect policyholders’ rights, simplify the insurance process, and ensure that insurance companies comply with evolving standards. The Master Circular impacts various aspects of life, health, and general insurance, making it crucial for policyholders to stay informed about the changes.
What are the new changes proposed by IRDAI regarding life insurance policies?
According to the latest Master Circular, insurance companies are required to issue life insurance policies within 15 days of accepting a proposal. Additionally, insurers cannot demand premium payments until the policy is accepted and issued, eliminating the need for upfront deposits before medical evaluations. The circular also mandates the inclusion of essential documents like the Customer Information Sheet (CIS), proposal form, and benefit illustrations without extra charges.
What is a Customer Information Sheet (CIS), and why is it mandatory in insurance policies?
The Customer Information Sheet (CIS) is a concise document that summarizes the key features, benefits, exclusions, and terms of an insurance policy in simple language. The IRDAI has made it mandatory for all life and health insurance policies to include a CIS, ensuring that policyholders are fully aware of what their policy covers and excludes, along with important details like waiting periods, sub-limits, and the claim process.
What are the new guidelines for health insurance claims settlement, especially for cashless claims?
The revised Master Circular sets a stringent timeline for settling cashless health insurance claims, mandating insurers to process these claims within 3 hours after receiving final discharge papers from the hospital. If the insurer delays the settlement beyond this period, they are required to pay a penalty. This change aims to ensure quicker support during critical moments and enhance the overall claim experience for policyholders.
How will IRDAI new rules affect policyholders with multiple health insurance policies?
The new IRDAI guidelines clarify that policyholders with multiple health insurance policies, such as a corporate policy and a personal super top-up, have the freedom to choose which policy to use as the primary insurer for a claim. This measure is designed to streamline the claims process and reduce delays, making it easier for policyholders to maximize their coverage without facing coordination issues between different insurers.
Disclaimer: The information provided in this article is for general informational purposes only and is based on the latest IRDAI master circular dated 5th September 2024. It does not constitute legal or financial advice. Policyholders are advised to review the official circular and consult with their insurance advisors or the respective insurance companies for specific guidance regarding their policies.