New Delhi, Jan 25 (PTI) Regulator Irdai on Monday asked life insurance companies to offer Saral Pension - a standard individual immediate annuity product - mandatorily from April 1 this year.
Saral Pension - prefixed by the insurer's name - will offer only two annuity options, Insurance Regulatory and Development Authority of India (Irdai) said in its guidelines on standard individual immediate annuity product.
The annuity options will be 'Life annuity with 100 per cent return of purchase price' and 'joint life annuity with a provision of 100 per cent annuity to the secondary annuitant on the death of the primary annuitant and return of 100 per cent purchase price on death of the last survivor', the guidelines said.
However, there will be no maturity benefit under the product.
Indian life insurance market currently has several individual immediate annuity products marketed by life insurers, with each product having its own features, terms and conditions and annuity options.
To have uniformity across insurers and make available a product by all life insurers that will broadly meet the needs of an average customer, Irdai said it is felt necessary to introduce a standard individual immediate annuity product with simple features and standard terms and conditions.
Such a standard product will make it easier for the customers to make an informed choice, enhance the trust between the insurers and the insured, and reduce mis-selling as well as potential disputes, it said.
'All Life Insurers permitted to transact new business shall mandatorily offer the standard product with effect from 1st April 2021,' it said.
The policy can be surrendered any time after six months from the date of commencement, if the annuitant or the spouse or any of the children of the annuitant is diagnosed as suffering from any of the critical illnesses specified in the policy document.
As per the guidelines, the minimum annuity will be Rs 1,000 per month, Rs 3,000 per quarter, Rs 6,000 per half year and Rs 12,000 per annum. There will be a limit for maximum annuity.
On minimum and maximum purchase price, the guidelines said it depends on the annuity amount.
The guidelines further said pricing is left to the insurers. However, annuity rates should be derived based on actuarial principles and ensure that such annuity rates are fair and reasonable to customers.
The product may be filed by the insurers latest by February 28, 2021, Irdai said. PTI NKD MR