Slew of life insurance rule changes to take effect 1 Feb

Life insurance in India will see a host of changes this new year, from allowing partial withdrawals to extending the revival period. The new rules will be effective from 1 February 2020.

To benefit customers, the IRDAI has relaxed regulations for pension plans, unit-linked plans (Ulips) and traditional life insurance plans.

According to a report in LiveMint, some of the changes will be:

Revival period

For unit-linked products, the revival period will be increased to three years. For non-linked products, the revival period will be five years. The current revival period is two years.

Pension plans

The withdrawal limit for pension plans is set to increase. The maximum withdrawal allowed at maturity will be 60% instead of the existing one-third of the corpus. However, withdrawal of one-third of the pension fund will be tax-free, not the entire 60%.

Unit linked plans (Ulips)

The minimum life cover in Ulips will be lowered to seven times instead of the existing 10 times for those under the age of 45. Furthermore, the mandatory guarantee in the pension Ulip segment will become optional from 1 February.

Source: Asia Insurance Review