Good news for policyholders. Earlier, there were no regulatory provisions for any refund to a policyholder, during the first year of policy issuance, in case a person committed suicide, and life insurers could have legitimately denied any payment of claims to the beneficiaries of such a life insurance policyholder during that period.

The Insurance Regulatory and Development Authority of India (IRDAI) has now relaxed the repayment terms for policyholders, in the case of death due to suicide. IRDAI in a recent notification said that in the case of the policyholder’s death due to suicide within 12 months from the start of the life insurance policy or from the date of revival of the policy, life insurers have to either pay the surrender value of the policy available or refund the premium to a policyholder.

The insurance regulator in the notification in case of Unit Linked insurance products clarified, “In case of death due to suicide within 12 months from the date of commencement of the policy or from the date of revival of the policy, as applicable, the nominee or the beneficiary of the policyholder shall be entitled to the fund value, as available on the date of intimation of death.”

Earlier, in case of the policyholder’s death by suicide, during the first year of policy issuance, there were no regulatory provisions for any refund to a policyholder. The life insurance company could have legitimately denied any payment of claims to the beneficiaries during this period of such a life insurance policyholder. Previously, only after 12 months of the policy issuance, any suicide linked death claims were allowed.

Now with the new life insurance regulations IRDAI notified that also in the case of non-linked policy, either the beneficiary or the nominee will be entitled to at least 80 per cent of the total premiums paid till the date of death or the surrender value as on the date of death, whichever is higher, provided the policy is in force. The insurance regulator in the notification in case of Unit Linked insurance products clarified, “In case of death due to suicide within 12 months from the date of commencement of risk under the policy or from the date of revival of the policy, as applicable, the nominee or beneficiary of the policyholder shall be entitled to at least 80% of the total premiums paid till the date of death or the surrender value available as on the date of death whichever is higher, provided the policy is in force.”

The regulator further said any charges other than Fund Management Charges (FMC) and guarantee charges recovered subsequent to the date of death will be added back to the fund value as available on the date of intimation of death.

On the death benefit to customers in the new regulation IRDAI further said, “For all the non-linked individual life insurance products, the minimum Sum Assured on death during the entire term of the policy shall not be less than 7 times the annualized premium, for limited or regular premium products, and 1.25 times the single premium for single premium products. Further, for other than single premium products, the minimum death benefit shall be at least 105 per cent of the total premiums received up to the date of death.