Insurance Regulatory and Development Authority of India (Acquisition of Surrender and Paid Up Values) Regulations, 2015

F. No. IRDAI/Reg/15/105/2015.—In exercise of the powers conferred under Section 114 (A) of the Insurance Act, 1938 read with Section 26 of Insurance Regulatory and Development Authority Act 1999, the Authority in consultation with the Insurance Advisory Committee, hereby makes the following Regulations for Acquisition of Surrender and Paid Up Values under Life Insurance Policies.

1. Short title and Commencement

• a. These Regulations shall be called Insurance Regulatory and Development Authority of India (Acquisition of Surrender and Paid Up Values) Regulations, 2015.
• b. The above Regulations shall come into force on the date of its publication in the official Gazette and shall be applicable to all the products offered by the life insurers which are approved by the Authority after the date of notification of these Regulations.
• c. The Authority may issue separate instructions for withdrawing the products which are not in compliance with these Regulations but are currently offered by the life insurers and which are approved by the Authority prior to the date of notification of these Regulations.
• d. Unless otherwise provided by these Regulations, nothing in these Regulations shall deem to invalidate the insurance policies issued prior to these Regulations coming into force.

2. Definitions

• a. “Act” means the Insurance Act, 1938 (4 of 1938).
• b. “Authority” means the Insurance Regulatory and Development Authority of India established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).
• c. “Sum Assured on Death” means an absolute amount of benefit which is guaranteed to become payable on death of the life assured in accordance with the terms and conditions of the policy excluding reversionary bonus and guaranteed additions, if any.
• d. “Sum Assured on Maturity” means an absolute amount of benefit which is guaranteed to become payable on maturity of the policy in accordance with the terms and conditions of the policy excluding reversionary bonus and guaranteed additions, if any.
• e. “Surrender" means complete withdrawal or termination of the entire policy.
• f. “Surrender Value" means an amount, if any, that becomes payable in case of surrender in accordance with the terms and conditions of the policy.
• g. All words and expressions used herein and not defined in these Regulations but defined in Insurance Act, 1938 or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or in any Rules or Regulations made thereunder, shall have the meanings respectively assigned to them in those Acts or Rules or Regulations.

3. Surrender Value and Paid-Up Value under insurance policies offered by Life insurers

a. Linked Insurance Platform

• i. Shall provide surrender value in accordance with Insurance Regulatory and Development Authority (Linked Insurance Products) Regulations, 2013, as amended from time to time.
• ii. Shall comply with all the provisions related to surrender or discontinuance in accordance with the Insurance Regulatory and Development Authority (Linked Insurance Products) Regulations, 2013, as amended from time to time.

b. Non-Linked Insurance Platform

• i. Shall provide surrender value in accordance with the Insurance Regulatory and Development Authority (Non Linked Insurance Products) Regulations, 2013, as amended from time to time.
• ii. Shall comply with all the provisions related to surrender in accordance with the Insurance Regulatory and Development Authority (Non Linked Insurance Products) Regulations, 2013, as amended from time to time.
• iii. Which has acquired a surrender value shall not lapse by reason of non-payment of further premiums but shall be kept in force to the extent of paid up sum assured and the subsisting reversionary bonuses including guaranteed additions, if any.
• iv. The paid up sum assured shall be calculated by means of a formula as approved by the Authority, and contained in the terms and conditions of the policy.
• v. For fixed premium policies:
  1. 1. On death: ratio of paid premiums to total premium term × Sum Assured on Death.
  2. 2. On maturity: ratio of paid premiums to total premium term × Sum Assured on Maturity.
  3. 3. Adjustments for survival benefits, if any.
• vi. For other policies, Authority may approve a different formula.
• vii. Exceptions to Regulation 3(b)(iii):
  1. Where the paid up sum assured (excluding bonuses) is less than ₹1,250 (other than Micro Insurance/Health Insurance).
  2. Where the paid up sum assured (excluding bonuses) is less than ₹100 (Micro Insurance/Health Insurance).
  3. Where paid up sum is an annuity less than ₹250 per month.

4. Termination Clause

A life insurance policy may be terminated after expiry of revival period by paying the surrender value if the paid up sum assured is less than the limits specified in 3(b)(vii).

5. Extraordinary Instructions

The Authority may issue instructions for payment of surrender value under extraordinary circumstances.