Everything You Need to Know About IRDAI’s New Rule For Term Insurance Plans
What are your reasons to not buy a term insurance plan? If it is the paperwork involved in the application process, you no longer have to worry about it. According to the new rules established by the Insurance Regulatory and Development Authority of India (IRDAI), buying term insurance has become all the easier.
The IRDAI has given the applicants the opportunity to fill out the term insurance application form, submit the necessary documents, sign them through the mobile phone, and you are done. In fact, people can use the term insurance premium calculator to determine the premiums charged on their chosen coverage and rider benefits before buying the policy.
In the wake of the on-going global pandemic, the traditional way of visiting the insurer and buying the term policy in-person seemed worrisome. People certainly are avoiding physical contact in any manner to keep themselves safe in these challenging times. Hence, filling out term insurance proposal forms and obtaining signatures of the applicants seem to have affected the term insurance sales. This gave rise to the new rules established by the IRDAI.
On the other hand, buying a term plan online is equally effective in avoiding physical contact with the outside world. However, most people still rely on agents and intermediaries to take care of the application processes.
To ensure the safety of everyone involved in the process, authorities have allowed the verification of the applicants to be done via electronic means. The traditional method of visiting the insurer in-person still exists, especially if anyone wants to follow it.
However, the new IRDAI rules for term insurance states the following –
- The insurers are allowed to obtain the consent of the applicants without their signature on the term insurance application form. This only holds true for insurers getting business through agents or other intermediaries and shall be subjected to the following:
The complete term insurance proposal form should be sent to the applicant on his/her registered email id or mobile number with a link. In case the applicant wants to provide their consent to the proposal form, they can do so by clicking on the confirmation link or by validating the OTP shared. The insurer can store this confirmation for verification of the consent. The insurer cannot accept any payments towards the term insurance plan until the applicant verifies the consent made by them.
During this entire process, the involved agent/intermediary will have to confirm that only the approved sales techniques have been used during the said process. They also need to certify the authenticity of the applicants’ email id or mobile number.
- The insurer will be liable for:
Providing the agent/intermediaries with approved sales techniques and ensuring that these have been used while soliciting the business with the given applicant.
Authenticating the email ids and mobile number of the applicants.
Making sure that the term insurance plan bought by the applicant is suitable for theirs and their family’s needs.
Conducting a pre-issuance verification call with the said applicant before issuing them the term insurance plan.
- This process is allowed on an experimental basis only until December 31, 2020, and is limited to life insurance products with no savings component.