BENGALURU: The Insurance Regulatory and Development Authority of India (IRDAI) has come up with final regulations with regard to the surrender value of insurance policies. This will be implemented from April 1.
Under the new regulations, all individual non-linked non-single premium products shall acquire a guaranteed surrender value on the payment of the premium for at least two consecutive years. Also, it issued a series of regulations.
“These regulations promote good governance in product design and pricing, including strengthening the principles governing guaranteed surrender value & special surrender value along with disclosures thereof,” IRDAI said in a statement.
The guaranteed surrender value (GSV) will be at least 30% of the total premiums paid, less any survival benefits already paid, if surrendered during the second year of the policy.
In the new norms, if surrendered during the third year of the policy, the GSV will be 35% and 50% between the fourth and seventh year of the policy.
For single premium products, the GSV will be 75% if surrendered within three years and 90% if one surrenders during the last two years of the policy. The decision is expected to mitigate ambiguity within the sector and could prompt a positive upswing. The IRDA (Insurance Products) Regulations, 2024, is largely maintaining the status quo as far as the surrender values of non-linked or linked life insurance products are concerned, and is a big departure from the exposure draft of Dec-23, said analysts at Emkay Global Financial Services.
Return on premium payment guaranteed
Under the new regulations, all individual non-linked non-single premium insurance products shall acquire a guaranteed surrender value on the payment of the premium for at least two consecutive years