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Insurance Regulatory and Development Authority in its exposure draft on surrender value regulations today has said that every policy offered under a non-linked (traditional) platform should be kept in force to the extent of the paid-up sum assured.
IRDAI said that these policies which have acquired a surrender value will not lapse by reason of non-payment of further premiums but would be kept in force to the extent of paid up sum assured, calculated by means of a formula as approved by the regulator.
The regulator said that the paid-up sum assured should not be less than the ratio of period for which premiums have already been paid. This is up to the maximum period for which premiums were originally payable multiplied by the sum assured on death.
In another draft on minimum limits for annuities, IRDAI has said that no life insurer can pay an amount of benefit excluding any profit or bonus on any policy of insurance issued, of less than an annuity of Rs 100 per annum or a gross sum of Rs 1000.
The regulator however clarified that this will not prevent an insurer from converting any policy into a paid-up policy of any value or payment of surrender value of any amount.
