Master Circular on Point of Sales Products and Persons – Life Insurance

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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA MASTER CIRCULAR ON POINT OF SALES PRODUCTS AND PERSONS - LIFE INSURANCE IRDAI/LIFE/CIR/MISC/ &. I J" /12/2019 2nd December, 2019 VER-01 ~l(dl~ itirr fcl~~l•Ni ~-~ INSURANCE REGULATORY AND ir.iai DEVELOPMENT AUTHORITY OF INDIA 2 nd December, 2019 Master Circular on Point of Sales Products and Persons - Life Insurance 1. The Authority had issued the following Guidelines in order to give an added fillip in providing easy access to Life Insurance Products to people at large and to enhance insurance penetration and density as part of its Development agenda. (a) Guidelines on Point of Sales Products (POS) - Life Insurance Products bearing No. IRDA/LIFE/GDUGLD/222/11/2016 dated 7/11/2016 and (b) Guidelines on Point of Sales Person - Life Insurance bearing No. IRDA/LIFE/ORD/GLD/223/11/2016 dated 7/11/2016 2. This Master Circular is a consolidation of the above two Guidelines and a few other Circulars issued by the Authority from time to time alongwith some additions/modifications and supersedes the Guidelines/Circulars placed in Annexure - I. 3. This Master Circular is issued in exercise of the powers vested with the Authority under Sections 14 (1), 14 (2) (c) and 14 (2) (e) of IRDA Act, 1999 and shall come into force with immediate effect. 4. Scope and Applicability: This Master Circular shall apply to (i) Point of Sales Persons - Life Insurance (POSP-LI) (ii) Life Insures engaging Point of Sales Persons - Life Insurance (iii) Insurance Intermediaries engaging Point of Sales Persons- Life Insurance 5. Definition 5.1 "Act" means the Insurance Act, 1938. 5.2 "Authority" means Insurance Regulatory and Development Authority of India established under Section 3 of the IRDA Act, 1999. 5.3 "Point of Sales Person - Life Insurance" (herein after referred to as POSP - LI) means an individual who possesses the minimum qualifications, has undergone training and passed the examination as specified in this Master Circular and solicits and markets only such products as specified by the Authority. 5.4 "Point of Sales Product - Life Insurance" (hereinafter referred to as POS-Life Product) means the simple plain vanilla type of product wherein each and every benefit is predefined and disclosed upfront clearly at the time of sale itself and is very simple to understand. 1 ifcf ;:j-_ 115/1 , ~~. 11,.Ffi<:1~1:s1, ~-500 032, 'l{ffif I Survey No. 115/1, Financial District, Nanakramguda, Hyderabad-500 032, India 6) : +91-40-2020 4000 ~ : www.irdai.gov.in 6) : +91-40-2020 4000 Website : www.irdai.gov.in PART - I : Point of Sales - Life Insurance Products (POS - Life Products) 6. Categories of POS-Life Products: 6.1 The Category I Nature of Products offered under POS -Life Products shall be as given hereunder: a. Pure Term Insurance Product with or without return of premium b. Non-linked Non-Participating Endowment Product (Survival benefit feature also allowed) c. Immediate Annuity Product d. Non-linked, Non-Par Health Insurance products with fixed benefits e. Any other product/ product category, if permitted by the Authority 7. The parameters of the aforesaid categories of products shall be as shown in Annexure - II. 8. The condition/eligibility/parameters mentioned in the Annexure - II for different categories of POS - Life Products are given as lower/upper limits within which the Insurer has the flexibility to design the product. 9. Solicitation and marketing of these products is allowed to be done through a. Point of Sales Persons - Life insurance b. Individual Agents of the Life Insurer c. Intermediaries authorized to solicit Life insurance products d. Insurer directly 10. Life Insurers shall offer these products only as Non-Linked and Individual insurance products. 11. Unless explicitly exempted in this Master Circular / Annexure-II, the extant Regulatory provisions shall be applicable mutatis mutandis to these products. 12. The Chief Executive Officer and the Appointed Actuary shall attach a certificate of compliance to these Master Circular provisions along with product filing. 13. 'Key Features Document (KFD) - cum - Proposal Form' Format: 13.1 There would be two parts of the 'Key Features Document cum Proposal Form', where the first part would be the KFD and second part would be the Proposal Form. Both the parts are joined by perforation so that the first part (KFD) can be easily separated and given to the proposer/ Life Assured for his/ her record and the second part (Proposal Form) is to be preserved by the insurer / representative for necessary processing. 2 13.2 Key Features Document (KFD) must contain all the key benefits under the plan including (a) Sum Assured on Death (b) Maturity Benefit (c) Surrender Value (d) Paid Up Value, if any (e) Exclusions (f) Registered name and address of the life insurer with logo etc. 13.3 In online mode, an explicit and exclusive consent shall be taken for KFD in a screen and a copy of such KFD has to be mailed to the proposer. 13.4 Every "Key Features Document cum Proposal form" should contain unique reference number on both parts. 14. The turnaround time for issuance of policy / acceptance of Risk and communication of Acceptance or otherwise to the customer of such policy should not be more than four (4) working days from the date of collection of proposal at the point of sale. 15. If the Proposal is not accepted for any reason whatsoever, the refund of payment should be done to the Proposer within seven (7) days from the date of the decision. 16. The existing (Non-POS) products which meet the parameters of the allowed categories of POS Life Insurance products may be applied enclosing KFD. Waiting Period clause shall be made part of proposal form as well as KFD. The application should also contain the certificate of CEO and Appointed Actuary of the Life Insurer certifying that the existing product meets the applicable parameters mentioned in the Annexure II to this Master Circular. Marketing of such product as POS-Life product shall be done only after filed application is approved by the Authority. PART - II Point of Sales Persons - Life Insurance (POSP - LI) 17. Point of Sales Person- Life Insurance (POSP- LI) 17.1 The proofs of identity acceptable for POSP-LI are (a) PAN Card (b) Aadhaar Card 17.2 The POSP-LI shall be at least 18 years age completed and shall have educational qualification of 10th standard pass. 17.3 Life Insurer or Insurance Intermediary proposing to engage POSP-LI shall (a) Conduct an in-house training of fifteen (15) hours for the candidate (b) Conduct an examination after successful completion of the training (c) Issue certificate to the candidate who pass the examination 3 (d) Engage the successful candidates in the examination as POSP-LI by issuing an Appointment Letter with appropriate terms and conditions within 15 days from passing the examination. (e) Allot a POS Code to the POSP-LI and place the same in the Appointment Letters issued to POSP-LI. (f) Maintain a proper training and examination record for at least five (5) years from the end of the financial year in which these are conducted and shall be made available to the inspecting official of the Authority during on-site inspection. 17.4 The Model Syllabus for training of POSP-LI is herewith attached as Annexure - Ill which may include the features of various POS-Life Products designed by the Insurer from time to time and may be modified and developed according to the changing need of the insurer and intermediaries. 17.5 POSP-LI is authorized to solicit and market Point of sales - Life insurance products. 17.6 POSP-LI is also allowed to distribute Micro Insurance products of Life Insurers and the commission payable shall be as applicable to the Individual Agents as approved under the Micro Insurance Product. If the product is sold through the POSPs-LI appointed by Intermediaries, the commission is payable only to the Intermediaries and not to these POSPs-LI. 18. Appointment of Point of Sales Person - Life Insurance (POSP- LI) 18.1 An Insurer or an insurance intermediary authorized to solicit and market life insurance business can engage a POSP-LI. 18.2 A POSP-LI engaged by an insurance intermediary can sell the POS - Life Products and Micro Insurance products of all such Insurers whose life insurance products the respective intermediary is authorized to sell. 19. Products solicited and marketed by Point of Sales Person - Life Insurance (POSP- LI) 19.1 The POSP-LI can sell Life Insurance Products filed with and approved by the Authority as POS-Life Products. 19.2 Insurers and Insurance Intermediaries need to adhere to the Guidelines/Circulars issued by the Authority with regard to Point of Sale Persons - Life Insurance and Point of Sales - Life Insurance Products from time to time. 4 20. Tagging of Proposal Form and Insurance Policy to POSP-LI 20.1 Every proposal form, in paper or in paperless form, insurance policy and other related documents shall carry provision to record the POS Code in order to tag the policy to the POSP-LI who is selling the said policy. 20.2 The Life Insurer shall be responsible to record the POS Code of the POSP-LI in the proposal form and insurance policy. The life insurer shall be responsible for the conduct of the POSP-LI representing him and any misconduct on the part of the said POSP-LI shall make the Life Insurer liable to penalty as per provisions of Section 102 of the Act. 20.3 For sales effected through the insurance intermediary, the insurance intermediary shall record the POS Code of POSP-LI in the proposal form and similarly the insurer also would require to do the same in the insurance policy. The insurance intermediary shall be responsible for the conduct of the POSP-LI engaged by it and any misconduct on part of the Point of Sales Person shall make it liable to a penalty as per provisions of Section 102 of the Act. 20.4 One of the factors that shall be considered while renewing the certificate of registration of the insurance intermediary shall be the conduct of the "Point of Sales Persons" working with insurance intermediary. 21. Compliance 21.1 The Life Insurers and Insurance Intermediaries shall make suitable provision in their policy administration system to capture the identity proof details submitted by POS persons attached to POS Code of the POSP-LI. 21.2 The POSP-LI when engaged by the Insurer shall place business with that insurer subject to compliance of rules and procedures of that insurer. 22. Where the POS Persons are authorized to collect and remit the premiums, they shall be mandated by the Insurers for issuing acknowledgements on collection of premiums and every Insurer shall put in place procedures to enable POS Persons issue such acknowledgements. 23. Insurers are accountable for such premium acknowledgements issued by POS Persons. 24. Life Insurers and Insurance Intermediaries shall keep with them the record of the particulars of the POSPs-LI and the business procured by them as per the formats given at Annexure IV and Annexure V. 25. Insurance Intermediaries shall submit the data maintained in Annexure V to Life Insurers and thereafter the Life Insurers need to submit the Annexure V to the Authority within the following timelines: 5 25.1 For the first half yearly period (April to September), the information has to be submitted on or before 31 st October. 25.2 For the second half yearly period (October to March), the information has to be submitted on or before 30th April along with the cumulative details of the year. 26. The premium paying term under POS-Life Product shall always be equal to policy term. The death and maturity benefits including Return of Premium shall be paid only in one lumpsum. 27. Power to Clarify In case of any doubt or ambiguity with regard to any of the provisions of this Master Circular, the Chairperson of the Authority may issue appropriate clarifications through circulars or guidelines as deemed necessary. (K. Ganesh) ember (Life) 6 Annexure -1 This Master Circular supersedes the following Guidelines and Circulars issued by the Authority: SI.No. Circular No Date Subject 1 IRDA/Life/ORD/GLD/223/11 /2016 7-Nov- Guidelines on Point of 2016 Sales Person - Life Insurance 2 IRDA/Life/ORD/GLD/222/11/2016 7-Nov- Guidelines on Point of 2016 Sales Products - Life Insurance Products 3 IRDA/Life/ORD/GLD/223/2017 7-Feb- Modification to POS 2017 Person Guidelines 4 IRDA/LIFE/CIR/MISC/POS/185/08/2017 4-Aug- Modification to 2017 Guidelines on Point of Sales (POS) - Life Insurance Products 7 Annexure - II (a) PureTerm Insurance Product With or Without Return of Premium Product Features/ Parameters I Eligibility: Minimum Age at entry 18 years. Maximum Age at Maturity 65 years Policy Term Minimum - 5 years Maximum - As proposed in F&U Application Sum Assured on Death Minimum - As proposed in F&U Maximum - No Limit (subject to Non-Medical underwriting only) (Sum Assured would be in the multiple of Rs. 50,000 only) Grace period As per extant regulatory norms Revival period As per extant regulatory norms Waiting Period Allowed up to maximum period of first 90 Days (for other than Accidental death only ) from the date of acceptance of risk Death Benefit (other than Accidental): If death takes place a. During waiting Period (if any) 100% of Premium paid b. After expiry of waiting Period Sum Assured on Death Accidental Death Benefit Equal to 'Sum Assured on Death'. No waiting period is applicable. Maturity benefits Nil (Without Return of Premium) Maturity Benefits At least 100%of Premium Paid. (With Return of premium) Underwriting Conditions Only Non-Medical underwriting Surrender Value As per extant regulatory provisions Accidental Death Benefit (in built ) Inbuilt ADB only allowed Commission For the POSPs engaged by Intermediaries no commission is payable by the Insurer. For the POSPs engaged directly by the Insurer, as proposed in the product F&U and approved by theAuthority as applicable to individual aqents. Other Features I Conditions As per extant regulatory provisions 8 (b) Non-linked, Non-Participating Endowment Product Product Features/ Parameters I Eligibility: Maximum Age at Maturity 65 years Policy Term Minimum - 5 years Maximum - 20 years Sum Assured on Death Maximum - 10 Lakhs ( excluding ADB ) Sum Assured on Maturity Guaranteed Maturity Benefit in absolute amount Grace period As per extant regulatory provisions Revival period As per extant regulatory provisions Death Benefit (other than Accidental ): If death takes place I. During waiting Period (if any) 100% of Premium Paid ii. After expiry of waiting Period Sum Assured on Death Accidental Death Benefit Equal to 'Sum Assured on Death'. No waiting period is applicable Maturity benefit Guaranteed Maturity Benefit in absolute amount in one lump sum (No settlement options are allowed) Surrender Value As per extant Regulatory Provisions Waiting Period Allowed upto a maximum period of first 90 Days (Other than Accidental death only) from the date of acceptance of risk Accidental Death Benefit Only Inbuilt ADB allowed Loan facility, if any Allowed Commission For the POSPs engaged by Intermediaries, no commission is payable by the Insurer. For the POSPs engaged directly by the Insurer, as proposed in the product F&U and approved by the Authority as applicable to individual agents. Underwriting Conditions Only Non-Medical underwriting Maximum Sum Assured Limit Rs. 10 Lakhs (excluding ADB) at insurer level (per on a single life insurer) Other Features As per extant Regulatory provisions 9 (c) Immediate Annuity Product Product Features/ Parameters/ Eligibility: Type of Immediate Annuity Only 'Life Annuity with Return of Purchase Price on death' allowed. Min / Maximum Age at Entry Minimum - 40 years Maximum - 70 years Mode of Premium Single Premium only Maximum Premium No Limit Minimum Annuity As per extant Regulation. Death benefit Return of Purchase Price Commission For the POSPs engaged by Intermediaries, no commission is payable by the Insurer. For the POSPs engaged directly by the Insurer, as proposed in the product F&U and approved by the Authority as applicable to individual agents. Other Features As per extant Regulatory provisions 10 (d) Non- Linked, Non-Par, Non- Medical Health Insurance Products (fixed Benefit) for Individual / Family Floater Policies only (Not to be sold as Group insurance) Product Features/ Parameters I Eligibility: Age at entry Minimum - 90 Days Maximum - As per extant Health Regulations Maximum Age at Maturity As per extant Health Regulations Policy Term Minimum - 5 years, Maximum - As proposed in F&U Application and approved by the Authority Sum Assured Minimum - As proposed under the product Maximum - Rs. 15 Lakhs (Individual) Rs. 20 Lakhs (Floater and Individual) (Sum Assured in the multiple of Rs.5,000 only) Mode of Premium Annual / Single Grace period As per extant regulatory norms Revival period As per extant regulatory norms Waiting Period Allowed Not more than first 90 Days (For any disease) from the date of acceptance of risk Benefits : (On diagnosis of a Disease/ contingency covered) During waiting Period (if any) - Refund of 100% of premium Paid After expiry of Waiting Period - Full Sum Assured Maturity Benefits As proposed in F&U application and approved by the Authority Underwriting Conditions Only Non-Medical underwriting Surrender Value As per approved F&U / Extant regulatory provisions Commission As per approved F&U application Other Features I Conditions As per extant regulatory provisions Exclusions As approved under F& U Pre- existing Disease Not Covered / as per extant regulations Portability Not Allowed Change in Sum Assured Not allowed (At any time during the term or at the time of Renewal) Post Diagnosis Survival As approved under F& U Conditions /Period Reinstatement I Renewal of Sum 100% Assured 11 Model Syllabus MODULE 1 - INTRODUCTION TO INSURANCE 1. Concept of insurance 2. Purpose and need of insurance 3. Concepts of Risk, Peril and Hazard. MODULE 2 - INDIAN INSURANCE MARKET 1. Insurers 2. Agents 3. Intermediaries 4. Role of POS Persons 5. IRDAI MODULE 3 - PRINCIPLES AND PRACTICE OF INSURANCE 1. Offer [Proposal] and Acceptance 2. Consideration (Premium) 3. Insurable Interest 4. Sales Literature 5. KFD cum Proposal Form 6. Renewal Notice 7. Utmost good faith 8. Premium payment options 9. Section 64 VB of Insurance Act 10. Policy Terms and Conditions MODULE 4 - POINT OF SALE - LIFE INURANCE PRODUCTS Annexure - Ill 1. Master Circular on POS Products and POS Persons - Life Insurance a. Categories of POS - Products b. Salient Features of POS - Life Product MODULE 5 - Miscellaneous 1. AML/KYC 2. Dos and Don'ts for POS Persons 3. Grievance Redressal Mechanism 4. Micro Insurance Regulations 5. Micro Insurance Products and their salient features 12 Annexure IV Name of the entity (Insurer/Insurance intermediary) ----------- No. of Total premium Name policies sold collected by Total Amount SI. of the POS Code by POS POS Person paid to PoS No PoS Person Person (in Rs) person (in Nos.) POS Ml POS Ml POS related Ml related Note: The information has to be maintained in electronic form by the insurance companies and insurance intermediaries, which can be accessed by the Authority on a remote location basis. 13 Annexure - V Half Yearly Return in respect of POS Life Products Business During the half-yearly period/ cumulative details during the Year* : Name of the Product: Distribution Channel **: S. No. Details of the business Number/ Amount (in lakhs) 1 Number of POS Persons as at the beginning of the Period 12 Number of POS Persons newly added during the period 3 Number of POS Persons terminated during the period 14 Outstanding POS Persons as at the end of the period 5 Total number of policies issued 6 Total premium collected 7 Total commission paid 8 Total service charges paid 9 Total number of policies discontinued (Non- single) after the grace period 10 Total number of policies revived 11 Total number of policies surrendered 12 Total number of claims outstanding as at the beginning of the period 13 The amount pertaining to total number of claims outstanding as at the beginning of the period 14 Total claims intimated during the period 15 The amount pertaining to total number of claims intimated 16 Total number of claims paid during the period 17 The amount pertaining to total number of claims paid 18 Total number of claims outstanding as at the end of the period 19 The amount pertaining to total number of claims outstanding as at the end of the period 20 Total number of claims rejected during the period 21 The amount pertaining to total number of claims rejected 22 Total number of claims repudiated during the period 123 The amount pertaining to total number of claims repudiated 124 Total in force at the end of the half yearly period 125 Total number of grievances registered * The details shall be given for the half year and for the year also separately. The details shall be given for each distribution channel separately. Last sheet should be a consolidated version of all the distribution channels (including direct business). Signature of the AA Date: Signature of the CEO 14