Policyholders are in for changes as the Insurance Regulatory Development Authority’s (IRDAI) new surrender norms take effect from April 1.
Per the directives, insurers cannot levy surrender penalties for policies with yearly, half-yearly or quarterly premium-paying terms after three years.
For single premium products, the charges will be barred after five years. This aims to make insurance policies more customer-friendly.
However, insurers warn this may impact returns for continuing customers. They may reduce bonuses to offset potential losses from early surrenders.
Customers will also need to rethink surrendering policies midway as higher charges continue for this year.
Financial experts advise analyzing existing policies basis the new norms and opt for surrender/swapping only if truly needed to maximize gains.
As the insurance landscape evolves, policyholders must keep abreast of changes to leverage new rules for maximum benefit.
