Starting this month, a policyholder will receive a larger reimbursement if he cancels his life insurance coverage during the first few years. The Insurance Regulatory and Development Authority of India (Irdai) has directed insurance companies to offer greater special surrender values (SSVs) for traditional endowment contracts from October 1, 2024. This is likely to increase flexibility and liquidity for life insurance clients looking to swap plans.
According to various reports, insurers, including the Life Insurance Corporation of India (LIC), have pushed Irdai to amend the surrender value regulations and extend the deadline for compliance. However, there has been no official correspondence or notice from Irdai indicating that the regulator has accepted their request. In the absence of an extension, insurance companies will be required to comply with unique surrender value laws that will go into effect on October 1, 2024.
Until today, if a policyholder left a life insurance coverage after one year, they would have forfeited the full premium. With the new special surrender value standard, policyholders will be eligible for a reimbursement even if they leave after the first year. According to the regulator. You should carefully review the insurance benefit illustration to comprehend the GSV, SSV, and surrender values that will be paid when you return the policy. Irdai has asked insurers to implement the special surrender value rule by September 30, 2024.
