The Insurance Regulatory and Development Authority of India (IRDAI) has tweaked some of the key norms pertaining to life insurance products.

The Insurance Regulatory and Development Authority of India (IRDAI) Monday released final product guidelines for both traditional and unit linked insurance products to improve the product proposition. It has relaxed rules governing pension products, Ulips and traditional plans by easing the surrender and annuity norms.

As per the Gazette notification, issued by the regulatory, the minimum death benefit in the non-linked policy has been decreased from 10 times to seven times. The minimum death benefit should be 105 per cent of the premiums received by an insurer until the death of the covered life.

On traditional products known as money back plans, the company will pay surrender value after payment of at least two consecutive years of premium from three mentioned earlier. The value will go up from 35 per cent in first two years to 90 per cent during the last two years. The revival period for this policy has been increased from two years to five years.

On the Ulip front, the regulator has extended the revival period to three years from two. Insurers will have to communicate within 3 months and the policyholder will have the option to revive the policy within the revival period of three years. Within a product, the cost of rider cover can be levied through rider charge or level rider premium.

In the Unit-Linked Policies, if it has a surrender value during the first five years, it will become payable only after the completion of the lock-in period. After the lock-in period, the surrender value shall be at least equal to the fund value as on the date of surrender.

On the pension front, the regulator has brought insurance on a par with the National Pension System. It has allowed holders of pension plans to utilize all, or take up to 60 per cent, to purchase immediate annuity or deferred annuity from the same insurer at the prevailing annuity rate or from any other insurer.

With regards to pension products, policyholders can withdraw 25 per cent of the insured during an emergency, including a serious illness, marriage and the education of their children.