HYDERABAD: In a bid to empower customers to make an informed choice, reduce misselling as well as potential disputes, the Insurance Regulatory and Development Authority of India (IRDAI) on Monday issued guidelines for life insurance players to launch standard individual annuity product — Saral Pension — from April 1, 2021.
The regulator pointed out that the Indian life insurance market currently has several individual immediate annuity products with different features, terms and conditions as well as annuity options.
As a result, IRDAI said a standard, individual immediate annuity product, with simple features and standard terms and conditions would meet the requirements of an average customer.
As per the guidelines, the standard individual immediate annuity product will be called, ‘Saral Pension’ and it will be prefixed by the insurer’s name.
This standard product will offer two options. In the first option, annuity will be paid for life of the annuitant and in addition, 100% purchase price will be returned to the nominee or legal heirs on death of the annuitant.
In the second option, the annuity is first paid to the annuitant for life and after death, if the spouse is surviving, he or she will continue to receive the same amount of annuity for life till his or her death.
Subsequently, on the death of the spouse, the purchase price will be payable to the nominee or legal heirs. However, if the spouse has died before the annuitant, then on the death of the annuitant, the purchase price will be payable to the nominee or legal heirs.
The minimum age of entry is 40 years while the maximum age is 80. While the pricing has been left to the insurers, IRDAI said that annuity rates should be fair and reasonable.
The minimum annuity payable under this standard plan is Rs 1,000 per month, Rs 3,000 per quarter, Rs 6,000 half yearly and Rs 12,000 per annum but there is no limit on the maximum annuity.
The regulator said that the policy can be surrendered any time after six months from the date of commencement, if the annuitant or the spouse or any of the children of the annuitant is diagnosed with any critical illnesses specified in the policy document.
On approval of surrender, 95% of the purchase price will be paid to the annuitant, subject to deduction of outstanding loan amount and loan interest, if any. IRDAI has asked insurers to file the product with the regulator by February 28, 2021.
The regulator pointed out that the Indian life insurance market currently has several individual immediate annuity products with different features, terms and conditions as well as annuity options.
As a result, IRDAI said a standard, individual immediate annuity product, with simple features and standard terms and conditions would meet the requirements of an average customer.
As per the guidelines, the standard individual immediate annuity product will be called, ‘Saral Pension’ and it will be prefixed by the insurer’s name.
This standard product will offer two options. In the first option, annuity will be paid for life of the annuitant and in addition, 100% purchase price will be returned to the nominee or legal heirs on death of the annuitant.
In the second option, the annuity is first paid to the annuitant for life and after death, if the spouse is surviving, he or she will continue to receive the same amount of annuity for life till his or her death.
Subsequently, on the death of the spouse, the purchase price will be payable to the nominee or legal heirs. However, if the spouse has died before the annuitant, then on the death of the annuitant, the purchase price will be payable to the nominee or legal heirs.
The minimum age of entry is 40 years while the maximum age is 80. While the pricing has been left to the insurers, IRDAI said that annuity rates should be fair and reasonable.
The minimum annuity payable under this standard plan is Rs 1,000 per month, Rs 3,000 per quarter, Rs 6,000 half yearly and Rs 12,000 per annum but there is no limit on the maximum annuity.
The regulator said that the policy can be surrendered any time after six months from the date of commencement, if the annuitant or the spouse or any of the children of the annuitant is diagnosed with any critical illnesses specified in the policy document.
On approval of surrender, 95% of the purchase price will be paid to the annuitant, subject to deduction of outstanding loan amount and loan interest, if any. IRDAI has asked insurers to file the product with the regulator by February 28, 2021.
