Insurance regulator IRDAI has allowed an additional 30-day grace period for policyholders to pay premium on life insurance policies whose renewal due date falls this month.
It had earlier provided a similar additional grace period to them with regard to the life insurance policies whose premium were due for payment in March.
An additional grace period is over and above the 30-day grace period, from the due date, that usually is available to pay the premium without any interest charges and thus ensuring continuity of the policy without any break.
The grace period varies depending on the frequency of premium payment – it is less, usually 15 days if the mode of payment is monthly and invariably 30 days for quarterly, half-yearly or yearly modes.
The additional grace period for life insurance policies whose premiums fall due in March and April 2020 will be 30 days, a circular issued by the Insurance Regulatory and Development Authority of India Member (Life) K.Ganesh said. The communication, however, did not specify whether it will be applicable to all life insurance policies irrespective of the frequency of payment.
The latest decision follows representations from life insurers and the Life Insurance Council to IRDAI, in which they had cited “various operational constraints and difficulties being faced by policyholders due to the nationwide three-week lockdown and social distancing norms,” in view of COVID-19 pandemic.
Settlement options
IRDAI, in another instruction to life insurers, said they may offer settlement options for maturity payout of Unit Linked Policies. Settlement options is a facility extended to the policyholder under the ULIP to receive the maturity proceeds in installments.
“Where unit linked policies mature and fund value is to be paid in lumpsum, life insurers may offer settlement options. This onetime option is regardless of whether such option exists or not in the specific product,” the circular said.
In doing so life insurers, however, have to “exercise all due care and diligence to explain clearly the possible downside risk of continued fluctuation of fund value based on daily NAV and clear consent has to be obtained from the policyholder. This is allowed for unit linked policies maturing up to May 31,” the circular said.
More time to file
IRDAI has also allowed additional time for insurers to file regulatory returns – 15 days for monthly returns; and 30 days for quarterly, half-yearly and yearly returns as well for Cyber Security Audit. The additional time allowed for filing regulatory returns is as on March 31, another circular said.
