In exercise of the powers
conferred under sub-section 2(zc) and 2(zd) of Section 114A of the Insurance Act, 1938 (4 of 1938) read with
Sections 14 and 26 of the Insurance Regulatory and Development Authority
Act, 1999, the Authority in consultation with the Insurance Advisory Committee,
hereby makes the following Regulations, namely: - (a)
These Regulations may be called Insurance Regulatory and
Development Authority of India (Non-Linked Insurance Products) Regulations,
2019. (b)
These shall come into force on the date of their publication in
the Official Gazette. (c)
These Regulations shall be applicable to all the products offered
by the life insurers under the non-linked platform. (i)
To ensure that insurers follow prudent practices in designing and
pricing of life insurance products and to protect the interests of the policyholders. (ii)
To ensure sound and responsive management practices for effective
oversight and adequate due diligence with regard to designing and pricing of
life insurance products. In these Regulations, unless the
context otherwise requires, (a)
"Act" means the Insurance Act, 1938 (4 of 1938). (b)
"Authority" means the Insurance Regulatory and
Development Authority of India established under subsection (1) of
section 3 of the Insurance Regulatory and Development Authority
Act, 1999 (41 of 1999). (c)
"Annualized Premium" shall be the premium amount payable
in a year chosen by the policyholder, excluding the taxes, rider premiums,
underwriting extra premiums and loadings for modal premiums, if any. (d)
"Death benefit" means the benefit which is payable on
death, as stated in the policy document. (e)
"Employer-Employee Group" means group where an
employer-employee relationship exists between the master policyholder and the
member, in accordance with the relevant laws. (f)
"Maturity Benefit" means the benefit, which is payable
on maturity as stated in the policy document. In addition to the sum assured on
maturity, the bonuses, additional benefits as stated in the policy and accrued
till the date of maturity shall become payable as part of the maturity benefit,
if not paid earlier. (g)
"Non-Employer-Employee Group" means group other than
employer-employee, where a clearly evident relationship between the member and
the group policyholder, for services other than insurance, exist. (h)
"Pure Risk Premium Products" means insurance products
where the payment of agreed sum (without any savings element) is assured on the
happening of a contingency dependent on human life within the term of the
policy and doesn't provide any payment of benefits either before survival or on
survival of the insured or on maturity of the policy. This definition is as per
Regulation 2(1)(g) of IRDAI (Expenses of Management of Insurers transacting
Life Insurance Business), Regulations, 2016. (i)
"Revival of a Policy" means restoration of the policy,
which was discontinued due to the non-payment of premium, by the insurer with
all the benefits mentioned in the policy document, with or without rider
benefits if any, upon the receipt of all the premiums due and other charges or
late fee if any, as per the terms and conditions of the policy, upon being
satisfied as to the continued insurability of the insured or policyholder on
the basis of the information, documents and reports furnished by the
policyholder, in accordance with Board approved Underwriting policy. (j)
"Rider Benefits" means an amount of benefit payable on a
specified event offered under the rider, and is allowed as add-on benefit to
benefit under base product, and may include waiver of premium benefit on other
applicable riders. (k)
"Savings Products" means those products other than
"Pure risk premium products". (l)
"Sum Assured on Death" means an absolute amount of
benefit which is guaranteed to become payable on death of the life assured in
accordance with the terms and conditions of the policy or an absolute amount of
benefit which is available to meet the health cover. (m)
"Sum Assured on Maturity" means the amount which is
guaranteed to become payable on maturity of the policy, in accordance with the
terms and conditions of the policy. (n)
"Surrender" means complete withdrawal or termination of
the entire policy. (o)
"Surrender Value" means an amount, if any, that becomes
payable in case of surrender, in accordance with the terms and conditions of
the policy. (p)
"Total Premiums Paid " means total of all the premiums
received, excluding any extra premium, any rider premium and taxes. (q)
All words and expressions used herein and not defined in these
Regulations but defined in the Insurance Act, 1938 or the Insurance Regulatory
and Development Authority Act, 1999 (41 of 1999) or in any Rules or Regulations
made thereunder, shall have the meanings respectively assigned to them in those
Acts or Rules or Regulations. CHAPTER II PRODUCT
STRUCTURES The product structure shall be
classified as participating products (herein after referred as "par
products") and non-participating products (herein after referred as
"non-par products"). Par products shall be as defined
in the IRDAI (Actuarial Report and Abstract for Life Insurance Business)
Regulations, 2016 and can be offered only under non-linked platform. Under the
par products, the bonus accruals during the term shall be as follows: (a)
Regular bonus shall be declared only on an annual basis; (b)
Interim bonus shall be declared at the annual valuation period,
which shall become payable during the inter-valuation period. (c)
Terminal bonus or other forms of bonus, if any, shall become
payable on the specified events or at the end of the term of the policy. (d)
In case of par products, the maturity benefits shall closely
reflect the asset share. Non par products shall be as
defined in the IRDAI (Actuarial Report and Abstract for Life Insurance
Business) Regulations, 2016. These products, namely, individual and group
products, may contain the following features: (i)
Under individual products, the benefits shall be explicitly stated
in advance at the inception of the policy without any discretion to the
insurer; (ii)
Under Group products, the benefits or interest rates, as
applicable, may be accrued at the end or at the beginning of either every month
or quarter or half-year or year as shall be explicitly defined or stated in the
product filing procedure, with no discretion to the insurer, where year shall
mean the financial year. Further classification of
products shall be as per the IRDAI (Actuarial Report and Abstract for Life
Insurance Business) Regulations, 2016. The pro duct filing documents
shall clearly mention the following classification: (a)
Par/Non-par (b)
Life/Pension/General Annuity/Health. (c)
Individual/Group (d)
Savings/Pure risk premium product. CHAPTER III MINIMUM
DEATH BENEFIT 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% of the total premiums received
upto the date of death. (a)
For the participating products, in addition to the sum assured on
death, the bonus and additional benefits as stated in the policy and accrued
till the date of death shall become payable on death as part of the death
benefit, if not paid earlier. (b)
The insurer may pay such death benefit in lump sum or in
instalments as per the terms & conditions of the policy contract. (c)
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. (d)
In case of fraud or misstatement or suppression of material fact,
the policy shall be treated in accordance with the provisions of Section 45 of the Insurance Act, 1938. (e)
For policies issued on minor's life, the date of commencement of
risk may start anytime on or upto two years from the date of commencement of
the policy or on the policy anniversary after attainment of majority, whichever
is earlier. (f)
The provision of minimum death benefit shall not be applicable to
reduced paid-up policies, pension products, all types of immediate and deferred
annuity products, and decreasing cover term insurance products. However, for
all individual pension products and deferred annuity products during deferment
period, the minimum benefit payable on death shall not be less than 105% of all
premiums paid upto date of death. CHAPTER IV ADMINISTRATION
OF NON-LINKED INSURANCE PRODUCTS A product shall not be launched
unless the Board or its delegated risk committee shall certify that "all
the processes and suitable infrastructure and system requirements on an ongoing
basis for the product (product name) to be launched are established and the
systems enable the insurer from day of launch of the product, to perform all
the day-to-day operations including all policyholder servicing, payments and
determination of the reserves and solvency margin as required under the Act,
the IRDA Act, Rules or Regulations framed thereunder from time to time."
The certificate shall be submitted to the Authority before the launch of the
product. CHAPTER V POLICY
TERM, PREMIUM PAYING TERM, COMMISSION, REMUNERATION AND EXPENSES The minimum policy term: (a)
For individual savings products, shall be at least five years. (b)
For group savings insurance products for employer-employee group
shall be at least one year (on annually renewable basis). (c)
Insurers may design products which offer a range of policy terms,
subject to a minimum policy term of one month, with respect to individual pure
risk premium product, group term, group credit Life and micro insurance
products. Premium Payment Term of Policies:
Irrespective of the policy term, all individual non-linked products, shall have
the minimum features as stated below: (i)
For individual saving products, other than single premium
products, the premium paying term shall not be less than 5 years. (ii)
Insurers may design products which offer a range of premium
payment terms with respect to individual pure risk premium product, group term,
group credit and micro insurance products. (iii)
Insurers may extend an option to a policyholder to alter the
premium payment term or policy terms provided that such alteration is in
accordance with their Board approved underwriting policy and the premium rates
to be charged under such circumstances are approved under product filing
procedure. Commission, Remuneration and
Expenses shall be as per the extant Commission and Remuneration Regulations,
Expenses of Management of Insurers transacting Life Insurance Business
Regulations issued by the Authority from time to time. CHAPTER VI PENSION PRODUCTS (a)
Pension products may be offered on any of the following platforms: (i)
Individual Non-linked pension products; (ii)
Group Non-linked pension products; (b)
Defined Assured Benefits: (i)
All individual pension products shall have explicitly defined
assured benefit that is payable on: (1)
Death; and (2)
vesting. (ii)
An assured benefit means at least one of the guarantees from the
following options: (1)
Non-zero positive rate of return on the premiums paid, excluding
applicable tax, from the date of payment to date of vesting or (2)
An absolute amount to be paid on death or maturity (which shall
result in non-zero positive return). (iii)
The defined assured benefit shall be disclosed at the time of
sale. (iv)
The assured benefit shall be utilized on the vesting date OR on
date of death as stipulated in the Regulations 15 and 16 under these
Regulations, as applicable. (c)
Pension products offered by the insurers may offer riders during
the deferment period. On surrender or vesting the
policyholder shall exercise one of the following options: (i)
To utilize the entire proceeds to purchase immediate annuity or
deferred annuity from the same insurer at the then prevailing annuity rate
subject to the Regulation 15(iii), the policyholder shall be given an option to
purchase immediate annuity or deferred annuity from any other insurer. or (ii)
To commute up to 60% and utilize the balance amount to purchase
immediate annuity or deferred annuity from the same insurer at the then
prevailing annuity rate subject to Regulation 15(iii). However, the
policyholder shall be given an option to purchase available annuity from any
other insurer. (iii)
Every policyholder shall be given an option to purchase immediate
annuity or deferred annuity from another insurer at the then prevailing annuity
rate to the extent of percentage, as stipulated by the Authority, currently
50%, of the entire proceeds of the policy net of commutation. (iv)
In case the proceeds of the policy either on surrender or vesting
are not sufficient to purchase minimum annuity as defined in Regulation 3(a) of
IRDAI (Minimum Limits for Annuities and Other Benefits) Regulations, 2015, as
amended from time to time, such proceeds of the policy may be paid to the
policyholder or beneficiary as lump sum. (a)
If the policyholder dies during the deferment period, the nominee
shall exercise one of the following options: (i)
To utilize the entire proceeds of the policy or part thereof for
purchasing an immediate annuity or deferred annuity from the same insurer at
the then prevailing rate. However, the nominee shall be given an option to
purchase an immediate annuity or deferred annuity from another insurer at the
then prevailing rate to the extent of percentage, as stipulated by the
Authority, currently 50%, of the entire proceeds of the policy net of
commutation. (ii)
Withdraw the entire proceeds of the policy; (b)
In case the proceeds of the policy are not sufficient to purchase
minimum annuity as stipulated by the Authority from time to time, the proceeds
of the policy may be paid as lump sum. (a)
For all group savings non-linked pension products with the defined
benefits subscribed to by an employer, where the scheme does not maintain
individual member accounts and only maintains a Pension fund: (i)
There shall be an assured benefit that shall be applicable on the
entire Pension fund available with the insurer. However, there shall also be an
assured benefit that is available on death of every member. (ii)
For exits on account of death, retirement or any other exit
allowed in accordance with the scheme rules as agreed at the inception of the
contract with group policyholder, the insurer shall make payments from the
Pension funds, subject to availability of such funds, as per the terms of the
scheme rules applicable to the member who is exiting. (iii)
Except for exits or provisions as allowed as per the scheme rules,
no other withdrawals shall be allowed. (b)
For all group savings non-linked pension products with the defined
contributions subscribed to by an employer, where the scheme maintains
individual member accounts: (i)
There shall be an assured benefit that shall be applicable on each
of such individual accounts. (ii)
For exits on account of death, retirement or any other exit
allowed in accordance with the scheme rules as agreed at the inception of the
contract with group policyholder, the insurer shall make payments from the
Pension funds, subject to availability of such funds, as per the terms of the
scheme rules applicable to the member who is exiting. (iii)
Except for exits as per the scheme rules, no other withdrawals
shall be allowed. (c)
Provisions stipulated in Regulations 15 and 16 under these
Regulations shall not be applicable to group non-linked pension products;
however, the benefits on exits shall be subject to the scheme rules. (d)
Provisions stipulated in Regulation 19(h) under these Regulations
shall apply in case of complete surrender of the policy. (e)
Where the group policyholder maintains Pension funds with more
than one insurer, the group policyholder shall have the option to choose any
insurer to purchase available annuity. CHAPTER VII ANNUITY
PRODUCTS (a)
Under the immediate annuity and deferred annuities including group
deferred and group immediate annuities, the following guaranteed for life
annuity options may be permitted under individual and group business: (i)
Life annuity. (ii)
Life annuity with Return of Purchase Price. (iii)
Annuity Certain for a specific period (period as approved under
the product filing procedure) and life thereafter. (iv)
Joint Life annuity with a provision of 100%, 50% or such other
percentages of annuity to Secondary Annuitant on death of the Primary Annuitant
and Return of Purchase Price on death of Last Survivor. (v)
Joint Life annuity with a provision for 100% or 50% or such other
percentages of annuity to Secondary Annuitant on death of the Primary
Annuitant. (vi)
Any other annuity, as approved by the Authority. Provided every annuity product
shall have at least options (i) and (ii) mentioned above. (b)
Under both group and individual deferred annuity products, (i)
annuity shall be payable at the end of the deferment period and
annuity rates shall be guaranteed at the inception of the contract. (ii)
Premium payment mode may be single, limited premium or regular
premium. CHAPTER VIII GROUP
PRODUCTS The following categories of
products shall be allowed under group business. (a)
Employer-Employee Group Products: The following group products
shall be permitted for employer-employee groups: (i)
Group Term Insurance products. (ii)
Group Savings Insurance products. (iii)
Group Credit Life Insurance products. (iv)
Single Premium Group Term Insurance Products. (v)
Micro Insurance products. (vi)
One-year renewable Group Term Insurance products. (vii)
One-year renewable Group Health Insurance products. (viii) Group
annuity products with the options prescribed under Regulation 18(a) under these
Regulations. (b)
Non-Employer-Employee Group Products: The following group products
shall be permitted for Non-employer-employee groups: (i)
Group Term Insurance products. (ii)
Group Credit Life Insurance products. (iii)
Single Premium Group Term Insurance products offered to only
non-employer-employee homogeneous groups. (iv)
Micro Insurance products. (v)
One-year renewable Group Health or Term Insurance products. (vi)
Government (Central or State) sponsored Group Insurance Products
or Schemes. (c)
For the purpose of these Regulations, non-employer-employee homogeneous
group shall mean: (i)
Any association, where the member represents a particular
profession or trade or domestic workers or anganwadi workers. (ii)
Government agencies. (iii)
Any cooperative societies. (iv)
Parents of school or college students as members. (v)
Any other groups as may be approved by the Authority. (d)
For the purpose of these Regulations, group savings insurance
products shall mean: (i)
Group Non-Linked Superannuation Product. (ii)
Group Non-Linked Gratuity Product. (iii)
Group Leave Encashment Product. (iv)
Group Post-Retirement Medical Product. (v)
Group products with significant savings element. (e)
The group savings non-linked policies stipulated in Regulations 19
(d) (ii), (iii), (iv) and (v) under these Regulations shall have minimum risk
cover as approved under product filing procedure, with an explicit mortality
cost levied. (f)
The premium with respect to group products shall be made in
accordance with the funding requirements as per the scheme rules. The trustee
or employer or policyholder shall be required to confirm that such funding is
required as per extant accounting standard governing the measurement of long
term employee benefits. (g)
The group savings non-linked products shall not allow any top-ups,
unless required to address the underfunding of the scheme as per extant
accounting standard governing the measurement of long term employee benefits. (h)
The group savings non-linked products may levy a surrender charge
not exceeding such per cent of the total fund value subject to an absolute
amount, as stipulated by the Authority, if the policy is surrendered within
third annual renewal of the policy. Currently, the surrender charge shall not
be exceeding 0.05 per cent of the total fund value with a maximum of Rupees
Five Lac. if the policy is surrendered within third annual renewal of the
policy. (i)
Group savings non-linked superannuation products may offer risk
cover with an explicit premium for the cover. (j)
The group insurance schemes shall be administered in compliance
with the directions issued from time to time regarding data management, collection
of premium, issuance of certificate of insurance, claim settlement,
reimbursement of expenses to master policy holders and other administrative
matters. (k)
In case of surrender of the group policy, other than fund based
group policies, the insurer shall give an option to the individual members of
the group, on such surrender, to continue the policy as an individual policy
and the insurer/intermediary if any, shall continue to be responsible to serve
such members till their coverage is terminated. (l)
Declaration of Interest Rates under Group Savings Insurance
Products: (i)
The insurers shall keep a separate account of all receipts and
payments in respect of each policy under Group Savings insurance products. The
valuation of assets and liabilities shall be in accordance with IRDAI (Assets,
Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016
and other relevant Regulations. (ii)
The interest rate credited to each fund and expenses charged to
such funds shall be in accordance with the Board approved policy of the
insurer. (iii)
However, such interest rates shall be declared by the insurers at
regular intervals based on the fund size with appropriate disclosure in the
insurer's website. (iv)
Interest rates shall need to be declared in such a way that there
shall be no discrimination amongst identical policyholders in terms of fund
size. (v)
Interest rates as well as expenses, if any, which need to be
charged to the fund shall be stated explicitly in the product filing documents. CHAPTER: IX SURRENDER
VALUE (a)
All individual savings and protection oriented products such as
non-linked life insurance products, and non-linked pension products including
deferred annuity products, other than pure risk premium products such as term
insurance, health insurance and immediate annuity products, shall acquire,
both, a guaranteed surrender value and special surrender value, if higher. The
guaranteed surrender value shall acquire in the following manner: If all premiums have been paid
for at least two consecutive years, the policy shall acquire a guaranteed
surrender value, to which shall be added the surrender value of any subsisting
bonus and any guaranteed additions already accrued to the policy. (b)
Other than single premium products: The minimum guaranteed
surrender value shall be the sum of guaranteed surrender value and the
surrender value of the any subsisting bonus and any guaranteed additions
already attached to the policy. The guaranteed surrender value
shall be at least: (i)
30% of the total premiums paid less any survival benefits already
paid, if surrendered during the second year of the policy, and (ii)
35% of the total premiums paid less any survival benefits already
paid, if surrendered during third year of the policy. (iii)
50% of the total premiums paid less any survival benefits already
paid, if surrendered between the fourth year and seventh year of the policy,
both inclusive. (iv)
90% of the total premiums paid less any survival benefits already
paid, if surrendered during the last two years of the policy. (v)
The surrender value beyond the seventh year shall be filed by the
insurer under the product filing procedure. Such surrender value shall follow a
smooth progression and converge to at least 90% of the total premiums paid less
any survival benefits already paid, as the policy approaches maturity. (vi)
Surrender value of any subsisting bonus and any guaranteed
additions already attached to the policy shall be stated under the product
filing procedure. (c)
Single premium products: The guaranteed surrender value shall be
the sum of guaranteed surrender value and the surrender value of the any
subsisting bonus and any guaranteed additions already attached to the policy.
The guaranteed surrender value shall be at least: (a)
75% of the total premiums paid less any survival benefits already
paid, if surrendered any time within third policy year. (b)
Subject to (iii), 90% of the total premiums paid less any survival
benefits already paid, if surrendered in the fourth policy year. (c)
90% of the total premiums paid less any survival benefits already
paid, if surrendered during the last two years of the policy. (d)
The surrender value beyond the fourth year shall be filed by the
insurer. Such surrender value shall follow a smooth progression, and converge
to at least 90% of the total premium paid less any survival benefits already
paid as the policy approaches maturity. (e)
Surrender value of any subsisting bonus already attached to the
policy shall be approved under the product filing procedure. (d)
Every such policy shall show the guaranteed surrender value of the
policy at the close of each year after the second year of its currency or at
the close of each period of three years throughout the currency of the policy
in the policy document. (e)
A policy which has acquired a surrender value shall not lapse by
reason of the non-payment of further premiums but shall be kept in-force to the
extent of the paid-up sum assured and the subsisting reversionary bonuses
including guaranteed addition, if any. This provision is in accordance with the
provisions of Regulation 3(b)(iii) of IRDAI (Acquisition of Surrender and Paid
Up Values) Regulations, 2015 as amended from time to time. (f)
The surrender value shall be the higher of the guaranteed
surrender value and the special surrender value. The special surrender value shall
represent the asset share in case of the par policies, where the asset share
shall be determined in accordance with the guidance or practice standards
issued by the Institute of Actuaries of India. For non-par savings policies,
the special surrender value shall reflect the guaranteed maturity or survival
benefits under the policy. CHAPTER X MISCELLANEOUS
PROVISIONS (i)
Collection of renewal premium in advance shall be allowed within
the same financial year for the premium due in that financial year. Provided,
the premium due in one financial year may be collected in advance in earlier
financial year for a maximum period of three months in advance of the due date
of the premium. (ii)
The renewal premium so collected in advance shall only be adjusted
on the due date of the premium. (iii)
The commission shall only be paid after adjustment of premium on
due date. (a)
Except for group products, the premium chosen at the outset shall
become payable throughout the premium paying term of the policy. Such premium
shall be level or uniform and shall not vary over the term of the policy
subject to (b) given below (b)
After payment of premiums for first five completed policy years,
the policyholder may be given an option to decrease the premium upto 50% of the
original Annualized Premium, subject to the minimum premium limits under the
product of the insurer. Once reduced, the premium cannot be subsequently increased.
Benefits may be revised subject to the minimum death benefit as stipulated
under Regulation 9 of these Regulations. Sustainability of the policy due to
reduction of premiums shall be demonstrated under product filing procedure. "Grace Period for other than
Single Premium Policies" means the time granted by the insurer from the
due date for the payment of premium, without any penalty or late fee, during
which time the policy is considered to be in-force with the risk cover without
any interruption, as per the terms & conditions of the policy. The grace
period for payment of the premium for all types of non-linked insurance
policies shall be: fifteen days, where the policyholder pays the premium on a
monthly basis; and 30 days in all other cases. "Limited Premium Payment
Policy" means the non-linked insurance policy other than single premium
policy, where the premium payment period is limited compared to the policy
term, and premiums are payable at regular intervals like yearly, half yearly,
quarterly, monthly or any other interval as approved by the Authority. "Non-linked Whole Life
Policy" means non-linked insurance policy, which does not have a definite
policy term and the policy terminates on death of the life assured or provides
coverage at least up to attainment of age 80 years. "Regular Premium
Policy" means non-linked insurance policy, where the premium payment is
throughout the term of the policy or premium payment term of the policy, and
premiums are payable at regular intervals like yearly, half yearly, quarterly,
monthly or any other interval as approved by the Authority. "Single premium Policy"
means non-linked insurance policy, where the premium payment is made in lump
sum at the inception of the policy. "Revival Period" means
the period of five consecutive years from the date of first unpaid premium,
during which period the policyholder is entitled to revive the policy which was
discontinued due to the non-payment of premium. Misleading and misrepresenting
the benefits through the name of the products or name of the benefit shall not
be allowed. (a)
Innovative products can be defined as the products which are
uncommon in the market. (b)
The innovativeness in product design shall result in meeting
customer needs, better customer understanding and satisfaction and shall not
result in complexity of understanding the product, additional strain on the
company's infrastructure, which may result in increased cost to the customer. (c)
The insurer shall submit to the Authority, the product design
concept of the proposed innovative product and other details along with
justification. All the products once approved
shall be reviewed by the Appointed Actuary at least once a year taking into
account the reasonable expectation of all stakeholders, including policyholders
to ensure that they are financially viable. A confirmation in this respect
shall be appended to the annual Actuarial Report and Abstract. If any product
is found to be financially unviable, the Appointed Actuary shall revise the
product as per the extant product filing procedure. (a)
Except for products where all the benefits are assured in absolute
amounts at the outset of the contract, all other insurance products shall
provide the prospective policyholder a customized benefit illustration at the
point of sale, illustrating the guaranteed and non-guaranteed benefits at gross
investment returns as stipulated by the Authority. Currently such gross
investment returns are 4% p.a. and 8% p.a. (b)
In case of pension products, a yearly statement shall be sent to
each policyholder indicating: (i)
the current accumulated value or available amount. (ii)
the expected accumulated value on date of vesting on the basis of
gross investment returns as stipulated by the Authority from time to time with
the caveat, that the projected rate shall not reflect any guarantee. Currently
the gross investment returns are 4% p.a. and 8% p.a. (iii)
likely annuity amount based on the then prevailing annuity rates
with the caveat that the projected rates shall not reflect any guarantee. (c)
Such benefit illustration shall be signed by both the prospective
policyholder, insurance agent or authorized persons of intermediary involved in
sales process, as the case may be and shall form part of the policy document. (d)
The benefit illustration as approved under the product filing
procedure shall be part of the sales literature and shall be furnished to the
prospective policyholder along with the sales literature before concluding the
sale. CHAPTER
XI WITH PROFIT FUND MANAGEMENT (i)
The With Profit committee shall be constituted with at least the
following members: One Independent Director of the
Board, the CEO, the CFO, the Appointed Actuary and an Independent Actuary. (ii)
The Independent Actuary on the With Profit Committee: (a)
shall be a Fellow member of Institute of Actuaries of India (IAI) (b)
shall have passed specialization subject in life insurance or
equivalent. For the purpose of specialization subject, (1)
Fellow members of the Institute of Actuaries of India who have
acquired fellowship before introduction of specialised subject examination,
conducted by the Institute of Actuaries of India (erstwhile Actuarial Society
of India) will be deemed to have passed the requisite specialisation subject. (2)
Fellow members of the Institute of Actuaries of India who have
been exempted from passing specialisation subject in terms of IRDAI (Appointed
Actuary) Regulations, 2017 as amended from time to time, will be deemed to have
passed the requisite specialisation subject. (c)
shall possess a valid Certificate of Practice in the area of Life
insurance issued by the Institute of Actuaries of India (d)
shall have relevant post qualification experience of at least ten
years in life insurance business and (e)
shall not exceed 75 years of age (f)
The Independent Actuary shall not continue in the With Profit
Committee of the same insurer for more than three consecutive years. (g)
For any financial year, the independent actuary shall not be part
of more than three With Profit committees. (iii)
The insurer may add more experts in the With Profit Committee in
the areas of Actuarial, Finance, Investment or any other domain. Such
additional experts need not satisfy the criteria stipulated for Independent
Actuary. (iv)
Asset Share: (a)
The insurer shall ensure maintenance of the Assets Share. (b)
The detailed working of the asset share, the expenses allowed for
in the asset share, the investment income earned on the fund and other
associated elements which are represented in the asset share shall be
determined by the Appointed Actuary. (v)
With Profit Committee Report (i)
The With Profit committee report shall at least cover the
following: (1)
Appropriateness of the Methodology and basis used in calculation
of asset shares, and justification for any change. (2)
Bonus earning capacity including its calculation. (3)
Sensitivity analysis of bonus rates and basis as appropriate. (4)
A brief note on how Policyholders' reasonable expectations (PRE)
is met. (5)
Any change in special surrender value with justification. (6)
Treatment of Fund for Future Appropriation. (7)
The expenses debited to the With Profit fund and its
appropriateness. (ii)
The report of the With Profit committee should be shared with the
Board of the insurer before finalization of year-end financial statements. The
With Profit committee report shall also be shared with the regulator along with
Actuarial Report and Abstract. The With Profit committee may be called upon by
the regulator to explain the rationale of the With Profit committee report. It
is expected that differences if any, between the view-point of the Appointed Actuary
and other members of the With Profit committee should be resolved before the
Appointed Actuary makes his or her final recommendation on with profit
business. However, to the extent that any material difference remains
unresolved, the same should be mentioned in the With Profit committee report. (iii)
The Appointed Actuary retains entire responsibility for his or her
work in compliance with the IRDAI (Appointed Actuary) Regulations, 2017 and in
conformity with the provisions of the Actuarial Practice Standards and
Professional Conduct Standards of the IAI. The Appointed Actuary must therefore
retain the final say on whether or not any element of his or her work needs to
be changed as a result of the With Profit committee report. The Appointed
Actuary is therefore advised to use discretion in this area with care. CHAPTER:
XII MARKET VALUE ADJUSTMENT (a)
Market value adjustment shall not be allowed under: (i)
Non-linked Individual products (ii)
Par and non-par group savings products where the exits are in
accordance with the scheme rules filed with the insurer at the outset, except
as stipulated in (b) below. (b)
Market value adjustment may be allowed for par and non-par group
savings products, for bulk exits and complete surrender, where the bulk exits
are clearly defined in the contract and provided there is an investment
guarantee assured throughout the policy. (c)
Market value adjustment shall be defined explicitly &
objectively and approved under product filing procedure. There shall not any
discretion left to the insurer in arriving at the market value adjustment. (d)
Market value adjustment shall not be applicable for the amounts
below the amount which represents the bulk exits and shall be applied only to
the amount which is over and above the amount representing bulk exit. (e)
Market value adjustment shall be applied only if: (i)
The assets are earmarked separately for the product. (ii)
The revaluation of assets at the time of market value adjustment
is carried out on the entire portfolio of assets. (f)
For the purpose of these Regulations, for par and non-par group
savings products: (i)
If the amount to be paid on total exits during the policy year
exceeds 25% of the policy account values as at the beginning of the year, such
transactions shall be treated as bulk exits, where exit shall be as per the
scheme rules and (ii)
Exit shall mean exit of the member from the group. CHAPTER
XIII PROCEDURE FOR IMPLEMENTATION AND OTHER PROVISIONS The insurers shall follow the
following procedure for implementation of these Regulations: (a)
All new products filed with the Authority after date of
notification of these Regulations, shall comply with these Regulations. (b)
All existing products complying with these Regulations can
continue to be open to new business. (c)
All existing products not complying with these Regulations, can
continue to be open to new business for a period stipulated by the Authority. (d)
Existing products need to be withdrawn or modified to comply with
these Regulations during the transition period. (e)
The Authority may issue guidelines or circulars with regard to
procedure for modification of existing products to comply with these
Regulations. (f)
Where any product or feature of a product is cleared by the IRDAI,
such clearances for the same kind of product or feature shall not be denied to
any other insurer. However, the Authority reserves the right to require
insurers to withdraw a product or a feature of the product if such product
feature is found not to be consistent with policyholder's interests. (a)
The Authority may, at any time, by an order in writing, direct any
officer of the Authority to inspect the affairs of any insurer and submit a
report on the reasonableness or otherwise of the compliance with the any of
these Regulations. (b)
Upon receipt of the report, the Authority shall, after giving an
opportunity to the insurer to make a representation in connection with the
findings in the report, direct the insurer appropriately. (c)
Without prejudice to the above, the Authority may also initiate
such action against the said insurer, as deemed appropriate, under the
provisions of the Act, the Insurance Regulatory and Development Authority Act,
1999 and the relevant Regulations framed thereunder. (a)
In order to remove any difficulties in respect of the application
or interpretation of any of the provisions of these Regulations, the
Chairperson may issue appropriate circulars, clarifications or guidelines, as
and when required. (b)
The Chairperson may also issue circulars or guidelines relating to
the Regulation of non-linked products including, but not limited to, their
administration, market conduct and disclosure norms, as may be required. (a)
The IRDA (Non-Linked Insurance Products) Regulations, 2013 shall
be repealed from the date these Regulations come into force. (b)
Unless otherwise provided by these Regulations, nothing in these
Regulations shall deem to invalidate the contracts entered prior to these Regulations
coming into force.INSURANCE
REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (NON-LINKED INSURANCE PRODUCTS)
REGULATIONS, 2019 [REPEAL]
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