The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for all life insurance providers to offer a standard individual immediate annuity product.
The ‘Seral Pension’ is a single premium policy and will only offer two options – a life annuity with 100% return of purchase price, or a joint life annuity with a provision of 100% annuity to the secondary client on death of the primary holder and a return of 100% purchase price on the death of last one of the two, the regulator explained.
Under the first option, an annuity is paid for life, while the purchase price will be returned to a beneficiary – or multiple ones – once the policyholder dies.
The latter has similar features, but the main difference is that, in the event of death of the main client, their spouse will receive the same sum in full until they also die. At that point, the purchase price will be given to their beneficiaries.
Reduce mis-selling
Minimum payments are set at INR1,000 per month, INR3,000 per quarter, INR6,000 twice-yearly, or INR12,000 (£120, $164, €135) annually.
Seral Pension will not provide a maturity benefit, however.
Insurance providers will have until 28 February to file the product, which is set to go live from 1 April 2021.
The IRDAI said: “The 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.
“With a view to having uniformity across insurers, and to make available a product by all life insurers that will broadly meet the needs of an average customer, 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.”
