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IRDA to change minimum sum assured for life insurance plans

The move is to ensure that policyholders are adequately covered

May 14, 2012 3:08 IST | India Infoline News Service

The Insurance Regulatory and Development Authority (IRDA) has decided to provide a minimum sum assured for all life insurance products in the event of death. The move is to ensure that policyholders are adequately covered. The change also means death benefits will be linked to premium payment unlike the case now.

The regulator said that life cover should be either 10 times annualised premium or105% of the total premium paid till the date of death. Currently, death and maturity benefits are calculated on the basis of sum assured and bonus. Also,there is no specified sum assured limit. At present, only unit linked insurance plans (Ulips), are required to offer minimum covers—ranging from 7.5to 10 times—the annual premium paid.

For non-participating policies, the sum assured will be based on the premium paying term and the premium paid annually.

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