What are the key insurance rule changes effective April 1, 2024? Know details

The new e-Insurance mandate for new policies aims to modernize the insurance sector and revise surrender charges providing clarity for traditional endowment policyholders. 

Starting from April 1, 2024, new insurance policies must be held in electronic format, similar to shares in a demat account. Here are the details:

Policyholders will need to open an e-Insurance Account (eIA) with one of the four repositories: CAMS Insurance Repository, Karvy, NSDL Database Management (NDML), or Central Insurance Repository of India. This move aims to streamline processes, enhance security, and provide greater accessibility by eliminating paperwork.

– All insurance policies (life, health, and general) will be consolidated in one place for easy management and updates.

 – While e-Insurance is mandatory for new policies, policyholders still have the option to receive physical documents if desired.

Surrender charges for traditional endowment policies:

The Insurance Regulatory and Development Authority of India (IRDAI) has announced revised surrender charges effective April 1, 2024, for non-linked or linked life insurance products, particularly traditional endowment policies.

The surrender value percentages vary based on the surrender period:

      – 30% of total premiums paid if surrendered during the second year.

      – 35% of total premiums paid if surrendered during the third year.

      – 50% of total premiums paid if surrendered between the fourth and seventh years.

      – 90% of total premiums paid if surrendered during the last two years.

While these changes benefit insurance companies, policyholders may not see significant relief, particularly in the initial surrender years. However, these changes reflect ongoing efforts to enhance customer experience and streamline insurance processes in the digital age.