Page 8 - Insurance Times August 2019

IRDAI introduces new IRDAI asks Axis to bring fare value deal to buy more Max

norms for ULIP and non- Life stake
linked products IRDAI has asked Axis Bank to rework its proposal for buying an additional 10%
in Max Life Insurance, as informed by the inside
IRDAI has recently issued new norms sources. The IRDAI has asked the Axis Bank to
for life in- come up with a fair value deal while turned down
s u r ance the current proposal of buying the stake at face
products value. Thus, Axis must pay more if it wants to
inclusive meet regulatory compliances and enhance its
of ULIP stake in the insurer. Max Financial Services, has a market capitalisation of Rs
and non-
11,209 crore. “The matter was brought to the regulator and it has asked Axis
linked products. According to the
Bank to rework the structure so that it pays market value for the transaction,”
new rules, the minimum death ben-
said a source.
efit in non-linked policy has been
decreased from 10 times to 7 times. Earlier attempt of Max Life to merge with HDFC Life and later to acquire IDBI
In non-linked policy, the customer Federal Life Insurance failed due to structure and valuation issues. In 2011, Axis
will get a fixed amount in case of the Bank acquired a 4 per cent stake from Max India in its joint venture Max Life
customer surrenders the policy after Insurance for an undisclosed value. Max Life had entered into a long-term agree-
two years. The revival period for the ment with Axis Bank, and that arrangement is valid at least until 2021. In order
non-linked policy has been increased to extend this arrangement, Max will have to either get into corporate agency
from two years to five years. or the equity structure tie-up.

Experts commented that the changes
in rules of life insurance products are IRDAI relaxes repayment conditions in suicide cases
going to help the customers in the In a recent move, IRDAI has relaxed the repayment conditions in case of death
long run. The minimum duration for due to suicide. The IRDAI has directed the domes-
a single policy has been fixed at five tic life insurers to refund the premium to a policy
years. The new rules underscored holder or pay the surrender value of his/her poli-
that the customers will be allowed to cies available in the case of his/her death due to
withdraw 25% of the insured sum suicide within 12 months from date of commence-
from pension products. However, this ment of the life insurance policy or from the date
can be done only in the time of emer- of revival of the policy, as applicable.
gency like serious illness, marriage Previously, no regulatory provisions were there for any refund to a policy holder
and education of children. during the first year of policy issuance. In case a person commits suicide and
If a customer wishes to buy ULIP life insurers can legitimately deny any payment of claims to the beneficiaries
with rider then they can take per- of such a life insurance policyholder during this period. Any death claims linked
mission for extra premium. In ULIP to suicide were allowed only after 12 months of the policy issuance.
policy, the customers will be allowed IRDAI in its revised life insurance regulations has said that in the case of non-
to add several riders including criti- linked policy, the nominee or beneficiary of the policyholder will be entitled to
cal illness by paying extra premium. at minimum 80% of the total premiums paid till the date of death or the sur-
Presently, the companies have the render value available as on the date of death whichever is higher, provided
option to reduce the unit if a cus- the policy is in force.
tomer takes rider in ULIP policy.
Meanwhile, in case of an unit linked policy, the nominee or the beneficiary of
In May, IRDAI had approved new the policyholder will be entitled to the fund value, as available on the date of
rules in the insurance sector appli- intimation of death following the death of the policy holder due to suicide within
cable to life insurance policies. It is 12 months from the date of commencement of the policy or from the date of
expected that the move would ben- revival of the policy, as applicable.
efit the sector as it will ease the pro- IRDAI has also informed that any charges other than Fund Management Charges
cess of launching new products and (FMC) and guarantee charges recovered subsequent to the date of death will
services for customers.
be added back to the fund value as available on the date of intimation of death.
8 The Insurance Times, August 2019