Two new insurance rules for the new financial year 2024
SURRENDER VALUE in Life Insurance policies
Starting April 1, 2024, as announced by the insurance regulator IRDAI, revised surrender values in non-linked or linked life insurance products – traditional endowment policies will go in effect. The proposed slabs for the surrender value percentages are as follows:
| Surrender Value | Surrender Period |
| 30% | 2nd Year |
| 35% | 3rd Year |
| 50% | between 4th to 7th years |
| 90% | last two years |
In December 2023, the IRDAI had released a consultation paper considering a proposal to increase the surrender value paid by life insurance companies to its policyholders.
The final decision on the Surrender Value rule avoids the initially proposed high surrender values, which could have decreased Internal Rate of Returns (IRRs) for policyholders.
While some believe these surrender values to be paltry and against the interests of the policyholders, there is also the view that increased surrender values could negatively impact life insurance persistency and ultimately life insurance penetration in the country.
Insurance policies in ELECTRONIC form
In its ‘Protection of Policyholders’ Interests regulations’ dated 20 March 2024, the regulator IRDAI made it compulsory for insurers to offer policies in electronic/ demat format irrespective of whether the proposal form was received in electronic or physical form.
BUT, it has also been clarified that, all policies issued in electronic form by the insurer directly to the policyholder shall also be issued in physical form, if requested by the policyholder.
This will be facilitated by four insurance repositories:
- CAMS Repository
- Karvy
- NSDL Database Management (NDML)
- Central Insurance Repository of India.
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