Policyholders Interest Regulations, 2002

Apart from the duty of IRDAI to protect the interest of the policyholders, there is also the Policyholders Interest Regulations Act of 2002, which lays down certain matters that need to be stated in every life insurance policy. 

A life insurance policy should clearly state: 

• the name of the plan , its terms and conditions;
• whether it is participating in profits or not
• the basis of participation in profits such as cash bonus, deferred bonus, simple or compound reversionary bonus
• the benefits payable and the contingencies upon which these are payable and the other terms and conditions of the insurance contract
• the details of the riders attached to the main policy
• the date of commencement of risk and the date of maturity or date(s) on which the benefits are payable
• the premiums payable, periodicity of payment, grace period allowed for payment of the premium, the date for the last installment of premium, the implication of discontinuing the payment of an installment(s) of premium and also the provisions of a guaranteed surrender value
• the age at entry and whether the same has been admitted
• the policy requirements for (a) conversion of the policy into paid up policy (b)surrender (c) non-forfeiture and (d) revival of lapsed policies
• contingencies excluded from the scope of the cover, both in respect of the main policy and the riders
• the provisions for nomination, assignment and loans on security of the policy and a statement that the rate of interest payable on such loan amount shall be as prescribed by the insurer at the time of taking the loan
• any special clauses or conditions, such as suicide clause etc.
• the address of the insurer to which all communications in respect of the policy shall be sent
• the documents that are normally required to be submitted by a claimant in support of a claim under the policy

i. While forwarding the policy to the insured, the insurer shall inform through the letter forwarding the policy, that the insured has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy and where the insured disagrees to any of those terms or conditions, he has the option to return the policy stating the reasons for his objection, whereby he shall be entitled to a refund of the premium paid, subject only to a deduction of a proportionate risk premium for the period on cover (15 days) and the expenses incurred by the insurer on medical examination of the proposer and stamp duty charges. This 15 day period is known as the free-look period.

ii. In respect of a cover, where premium charged is dependent on age, the insurer shall ensure that the age is verified, as far as possible, before issuance of the policy document. In cases where age has not been admitted by the time the policy is issued, the insurer shall make efforts to obtain proof of age and admit the same as soon as possible.