Life insurance companies have got big relief from IRDAI on surrender value. Now under the new rules, the surrender value will be decided by the policy surrender period. That means, the longer the policy surrender period, the higher the surrender value.
Insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) has given big news for the companies and customers of the insurance sector. Life insurance companies have got big relief from IRDAI on surrender value. Now under the new rules, the surrender value will be decided by the policy surrender period. That means, the longer the policy surrender period, the higher the surrender value. These new rules are going to come into effect from April 1, 2024. Let us understand.
What will be the surrender value on Non-Single Premium?
- If the policy is surrendered in the second year, you will get 30% of the total premium paid.
- If the policy is surrendered in the third year, you will get 35% of the total premium paid.
- If the policy is surrendered in the fourth to seventh year, then 50% of the total premium paid will be received.
- If the policy is surrendered before 2 years of completion, you will get 90% of the total premium paid.
What will be the surrender value on Single Premium?
- If the policy is surrendered in the third year, you will get 75% of the total premium paid.
- If the policy is surrendered in the fourth year, you will get 90% of the total premium paid.
- If the policy is surrendered before 2 years of completion, you will get 90% of the total premium paid.
What is positive for life insurance customers?
- There is no significant change in the new surrender value for policies up to 3 years.
- Most policies surrender after 3 years.
- There is a slight increase in the surrender value between the fourth and seventh years.
- Most policies are not surrenderable after the seventh year.
Let us tell you that IRDAI has approved 8 principle based regulations. This amendment will be important for regulatory governance. A total of 34 regulations have been changed by 6 regulations. Along with this, two new regulations have also been brought.
