The insurance regulator has also warned HDFC against changing terms and conditions without prior approval.
The insurance regulator has found that the insurance company had discriminated within two categories of policyholders i.e. policyholders who bought these policies before and after April 1, 2012 under its two policies - HDFC Life Sampoorn Samriddhi Plan and HDFC Life Classic Assure Plan.
Investors who have bought these policies after a specified date have been offered death benefits which are equivalent to 10 times of annual premium whereas those who had taken these policies before the mentioned date had only been given death benefits in the form of basic sum assured with some bonuses.
Earlier, IRDA had issued a show cause notice to HDFC Life Insurance. Responding to the notice, the insurance company had admitted that the discrepancies occurred due to changes in income tax structure during 2012. The company said “Based on the feedback from customers and distributors, as an interim customer friendly measure it has decided to increase the death benefit to 10 times, in order to ensure that the policy holders who purchased the policies on or after April 1, 2012, are not put to undue disadvantage by the sudden change in the tax rules. Hence, it was decided to treat the additional death benefits as ex-gratia payment to debit these payments to shareholder accounts.”
However, after examining the case, the IRDA has directed the life insurer to provide similar death benefit to all the policyholders of the products as the same amount of premium is paid by the policyholders in both cases.
IRDA has also directed HDFC Standard Life insurance to reopen and settle past claims under the two policies based on the higher death benefit within 60 days i.e. on or before November 2, 2013.
Also, IRDA has warned HDFC Life for violation of file and use guidelines i.e. changing the terms and conditions of approved versions of the products without prior approval of the regulator.