Policyholders can make advance payments only 15 days prior in case of monthly payments and 30 days prior in non-monthly payments.
IRDA has directed life insurance players to stop accepting advance premium payments. This move of IRDA is to control mis-selling by intermediaries who advise the policyholders to make a lump sum payment of premium before the due date so that the policy holders can avail a nominal interest or some discount on it, said a CEO of a top life insurance company to Cafemutual.
As per the draft issued by IRDA to all the life insurance CEOs, insurers can now accept monthly premium 15 days in advance and in case of non- monthly payment 30 days prior. The regulator has asked insurers to refund the advance premium collected by them and not adjust with the due dates of the policyholders within seven days of the date of this circular.
IRDA is in the process of framing the final guidelines and will issue it to the life insurance players soon. The industry professionals feel that the move is towards a right direction which will make the policyholders more alert. “Policyholders are usually dependent on the agents for renewal. But now even they have to be alert and keep a track of their portfolio. This move will also help the industry to curb mis-selling for minor interest gains,” said a CEO of a top Life Insurance company.
P Nandagopal, Managing Director & CEO, India First Life Insurance had a different take. “Paying premium prior to due date makes life easy for customers. If they are discarded from such facility, it will make their life difficult as they have to pay the premium exactly 30/15 days prior to the due date,” said Nandagopal.