IRDAI announces new surrender value rules: What does it mean for existing life insurance policyholders?

The Insurance Regulatory and Development Authority of India (IRDAI) has released new regulations on life insurance policy surrender values. Effective by September 30, 2024, these rules require that the Special Surrender Value (SSV) is payable after the first policy year if one full year's premium is paid. \r

Insurers must ensure that the SSV is at least equal to the expected present value of the paid-up sum assured and future benefits, using an interest rate not exceeding the 10-Year G-Sec yield plus 50 basis points. These changes aim to increase surrender values for policyholders. \r

Additionally, the new regulations include a simplified Customer Information Sheet, mandatory policy loans, extended free look periods, and improved grievance processes to enhance customer value and industry growth.