The Insurance Regulatory and Development Authority of India (IRDAI) has always strived to safeguard the interests of insurance policyholders. In an effort to enhance transparency, streamline claim processes, and make insurance policies more accessible and understandable, the IRDAI has released a master circular titled "Protection of Policyholders' Interests 2024." Issued on September 5, 2024, this circular outlines key rights that all life and health insurance policyholders in India should be aware of. The circular covers a wide range of aspects including the mandatory issuance of e-insurance policies, detailed claim settlement timelines, and new rules for policyholders with multiple health insurance policies. It aims to empower policyholders with the knowledge to ensure they get the most out of their insurance policies.
Understanding these rights will not only help you in selecting the right insurance policy but also in dealing with any future claims more efficiently. Below is a detailed breakdown of the key provisions laid out in the IRDAI’s 2024 circular, explained in simple terms to make it easy for policyholders to grasp their rights.
All Insurance Policies to Be Issued in E-Format
In today's digital age, managing paperwork can be cumbersome. To simplify the process, IRDAI has mandated that all insurance policies, whether life or health, must be issued in electronic format. These e-policies can be signed digitally, making the whole process faster and more secure. If you prefer to receive a physical copy of your policy, you can request it, but you must indicate this preference in the proposal form itself.
While opting for e-policies is convenient for storing and accessing documents, it also reduces the risk of loss or damage that may occur with physical documents. However, policyholders who are not comfortable with digital formats can still choose to receive hard copies, ensuring that all types of customers are catered to. This initiative is in line with India’s growing digital infrastructure and is expected to make the policy issuance process more efficient.
Key Documents You Must Receive with a Life Insurance Policy
If you're buying a life insurance policy, knowing the documents you should receive from your insurance company is essential. According to the new regulations, insurers are required to issue the policy within 15 days of accepting the proposal form. Additionally, insurers are no longer allowed to collect the initial premium along with the proposal form unless the policy can be issued immediately based on a declaration of good health from the customer.
Here are the key documents that you should receive when your life insurance policy is issued:
- Covering Letter: This letter informs you about the start of the free-look period, which allows you to review the policy and return it if you are unsatisfied.
- Policy Document: The official document that outlines the terms and conditions of your insurance.
- Copy of the Proposal Form: This is the form you submitted to the insurer when applying for the policy.
- Benefit Illustration: A detailed explanation of how your policy benefits will work over time, including expected returns and coverage.
- Customer Information Sheet (CIS): A summary of the key features and benefits of your policy in a simple format.
- Need Analysis Document: If applicable, this document outlines why the chosen policy suits your financial and insurance needs.
- Any Other Relevant Documents: Additional documents specific to the type of insurance product you’ve purchased.
These documents are crucial for understanding your policy thoroughly, and it's essential that you keep them safe. In case you face any issues later, these documents will serve as proof and clarification for both you and the insurer.
Mandatory Customer Information Sheet (CIS)
The Customer Information Sheet (CIS) is a critical document that ensures transparency between the insurer and the policyholder. IRDAI mandates that a CIS must be provided along with every life and health insurance policy. This sheet serves as a concise summary of the policy's key features, helping policyholders better understand what they are purchasing.
For life insurance policies, the CIS must follow the format laid out in Schedule D of the Insurance Act. This ensures that policyholders receive consistent and clear information, irrespective of the insurance company they choose. The CIS contains the following key details:
- Type of Insurance: Whether it is a term life policy, whole life policy, or another form of life insurance.
- Sum Assured: The amount that will be paid to the beneficiaries in case of death or other claimable events.
- Benefits: A detailed explanation of the coverage provided under the policy, such as death benefits, maturity benefits, etc.
- Exclusions: Events or situations that are not covered by the policy. For example, certain pre-existing conditions might not be covered immediately.
- Free-Look Period: The duration during which you can review the policy and return it if you're not satisfied.
- Policy Renewal: Information on when and how the policy can be renewed, if applicable.
- Claims Procedure: A step-by-step guide on how to file a claim in case of death, maturity, or other covered events.
- Grievance Redressal Mechanism: Contact information for raising complaints, including details for the Insurance Ombudsman.
Having the CIS ensures that you are fully aware of the product you are buying, eliminating any confusion that may arise due to complex policy language. It’s always advisable to go through the CIS carefully before making a final decision on purchasing any insurance product.
30-Day Free-Look Period for Life Insurance Policies
One of the major concerns for policyholders is whether they made the right decision in choosing a policy. IRDAI has addressed this concern by allowing a 30-day free-look period for life insurance policies that have a term of one year or more. This means that after receiving your policy, you have 30 days to review its terms and conditions. If, during this period, you find that the policy does not meet your expectations or needs, you have the right to return it to the insurer for a full refund.
This provision gives policyholders ample time to make an informed decision and ensures that they are not locked into a policy they are unhappy with. It also promotes transparency and trust between insurers and their customers.
Claim Settlement Timelines for Life Insurance Policies
One of the most significant concerns for any policyholder or beneficiary is the timely settlement of claims. IRDAI has set clear timelines for settling life insurance claims to prevent any unnecessary delays. Here are the timelines you need to know:
- Death Claims (No Investigation Required): These should be settled within 15 days of receiving the claim request.
- Death Claims (Investigation Required): In cases where investigation is necessary, the claim should be settled within 45 days of receiving the request.
- Surrender or Partial Withdrawal Requests: These should be processed and settled within seven days.
- Maturity Benefits, Survival Benefits, Annuity Payouts, and Income Benefits: These should be paid on the due date specified in the policy document.
If the insurer fails to settle the claim within the specified time, the policyholder or claimant is entitled to receive interest on the claim amount at the bank rate plus 2% from the date the claim was filed until it is settled. The insurer is required to pay this interest automatically, ensuring that delays in settlement do not go unaddressed.
Nomination is Mandatory for Life Insurance Policies
When you fill out a proposal form for a life insurance policy, you are required to provide the details of your nominee. Nomination is a crucial step as it ensures that the claim amount is paid to the right person in case of the policyholder's death. Under the new IRDAI guidelines, nomination is now mandatory for all life insurance policies. You can nominate one or more individuals and specify the percentage of the claim amount that should go to each nominee.
This measure helps avoid disputes and ensures that your beneficiaries receive the claim amount smoothly. It also adds a layer of clarity, especially in situations where multiple beneficiaries are involved.
CIS for Health Insurance Policies
Health insurance policies also come with a mandatory Customer Information Sheet (CIS), similar to life insurance policies. The CIS for health insurance provides a summary of the key features of your policy, including:
- Type of Insurance: The kind of health insurance policy you’ve purchased.
- Sum Insured: The maximum amount the insurer will pay for medical treatment.
- Coverage Provided: A summary of what the policy covers, such as hospitalization, outpatient treatment, and pre-existing conditions.
- Exclusions: A list of treatments or conditions that are not covered by the policy.
- Sub-Limits: Predefined limits on certain treatments, such as room rent or specific medical procedures.
- Deductibles: The amount that you must pay out of pocket before the insurer pays the claim.
- Co-Payment: The percentage of the claim amount that you must pay.
- Waiting Period: The duration during which certain diseases or treatments are not covered by the policy.
The CIS also contains important information regarding the claims procedure, customer support, and grievance redressal mechanisms, including the contact details of the Insurance Ombudsman. Having a CIS allows you to easily understand your health insurance policy’s features, which is especially helpful in case of an emergency or during a claim process.
Streamlined Health Insurance Claims: Cashless Claims Settled in 3 Hours
Health insurance claims can often be a cause of stress for policyholders, especially during medical emergencies. IRDAI has introduced new guidelines to streamline the cashless claim process. Insurers are now required to make a decision on cashless treatment requests within one hour of receiving the request from the hospital. Additionally, insurers must issue the final authorization for discharge within three hours of receiving the hospital’s request for discharge.
If the insurer fails to meet these timelines, they will be responsible for any additional charges incurred due to the delay. This ensures that policyholders are not burdened with additional costs due to slow claim processing. Moreover, if the policyholder dies during treatment, the insurer must process the claim immediately and release the body to the family without any delays.
Flexible Claims for Multiple Health Insurance Policies
If you hold multiple health insurance policies, you now have more flexibility in filing claims. Under the new guidelines, you can choose to make a claim under any of your policies, even if that policy does not provide full coverage for the expenses. In such cases, insurers will coordinate with each other to settle the remaining claim amount from your other policies. This ensures that you get the maximum possible benefit from all your policies without going through the hassle of filing multiple claims.
This coordination between insurers simplifies the claims process for policyholders with multiple policies, making it easier for them to get adequate coverage for their medical expenses.
Insurer’s Responsibility to Offer Comprehensive Health Insurance Products
To ensure that health insurance is accessible to everyone, IRDAI has mandated that insurers must offer products and add-ons that cater to a wide range of policyholders. This includes:
- People of all ages.
- Different medical conditions, including pre-existing and ongoing health issues.
- Pre-existing diseases and long-term (chronic) health conditions.
- Treatments from all medical systems like Allopathy, AYUSH (Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homoeopathy), and other medical practices.
- Every treatment type, including home-based care, outpatient services (OPD), short-term treatments (Day Care), and hospital-at-home services (domiciliary hospitalization).
- People from all regions, in all types of jobs, including those with disabilities or any other special categories.
- All hospitals and healthcare providers should offer affordable options for policyholders. Policyholders should never be denied coverage, especially in emergencies.
Insurance companies must also ensure that their health insurance products follow the rules of various laws:
- The Mental Healthcare Act, 2017 (for mental health treatment and care).
- The Rights of Persons with Disabilities Act, 2016 (ensuring coverage for people with disabilities).
- The Surrogacy (Regulation) Act, 2021 (coverage related to surrogacy).
- The Transgender Persons (Protection of Rights) Act, 2019 (rights and coverage for transgender individuals).
- The HIV and AIDS (Prevention and Control) Act, 2017 (ensuring coverage and protection for people with HIV/AIDS).
Conclusion
The IRDAI’s Protection of Policyholders' Interests 2024 master circular provides essential protections and rights for both life and health insurance policyholders. By introducing clear timelines for claims, mandating the issuance of electronic policies, and simplifying the claims process for multiple policies, the circular ensures that policyholders are better protected and informed. Whether you are purchasing a new policy or already have one, being aware of these rights will help you make informed decisions and ensure that you get the maximum benefit from your insurance policy. As always, it's important to review your policy documents carefully and make sure that you understand the terms and conditions before making a purchase or filing a claim.