Buying a term plan has become easier with the IRDAI allowing the selling of insurance through OTP. The new IRDAI rule allows authenticating term plan proposals through OTP instead of a physical signature.
While the easiest way to buy a term plan is to visit the insurer’s official website and buy online, many people still prefer to buy offline through branch offices, agents, or other intermediaries. However, the offline purchase of term plans was severely affected during the Covid-19 lockdown and subsequent movement restrictions in most parts of the country.
Therefore, the Insurance Regulatory and Development Authority of India (IRDAI) came up with a solution that allows a person to buy term insurance from the respective insurance agent from the comfort of home. IRDAI drafted these rules after due consultation with the representatives of various insurers.
Salient Points of the New IRDAI Rule
- Electronic Authentication
The new IRDAI rule allows electronic authentication for insurance plans purchased through agents without requiring a physical signature of the buyer. Such proposal forms would be subjected to the following guidelines:
- The insurer will send the completed proposal form to the buyer’s registered email id or mobile phone number as an email or an SMS with a link.
- The policy buyer can validate the purchase by clicking on the confirmation link or sharing the OTP.
- Evidence of the buyer’s consent is to be maintained by the insurer. Payment toward the insurance proposal shall not be accepted until the receipt of the consent of the buyer.
- Insurer’s Responsibility
The insurer will be responsible for
- Providing approved digital sales materials to its intermediaries or agents and ensuring their proper usage.
- Giving a verification call to the prospective buyer before issuing any proposal.
- The insurer will carry out authentication of the prospective buyer’s email ids and mobile numbers.
- Ensuring the suitability of the term plan being purchased.
- Grievance Redressal
The insurer shall maintain a separate record of all the grievances regarding sales through the OTP validation and submit a monthly statement to the IRDAI.
- Limited Applicability
The new rule is limited to pure-risk insurance products, like term plans that don’t have any savings element.
- The Rule is Temporary
The IRDAI has allowed the new rule on an experimental basis. The rule was introduced during the pandemic and was initially effective till 31st December 2020. However, it got multiple extensions since then, and OTP-based validation of term plans is now allowed till 30th September 2022.
The IRDAI reserves the right to revoke the rule at any point in time for a single or all insurers.
A term insurance plan can play a crucial role in providing financial stability to your family in your absence. Now that the IRDAI has simplified the purchase of term plans using OTP, it is high time you consider buying one to secure your family’s future.