20 THE GAZETTE OF INDIA : EXTRAORDINARY [PART Ill-SEC.

4)

Note: Details of items of data obtained by insurer under each batch shall be maintained as
an annexure, with serial numbers

J. HARi NARAYAN, Chairman

[ADVT. lll/4/161/10/Exty.]

~.1~,2010 •

~. ;t "ait.ftf.ftf.W. ~/2/S2/2010.- ll1N'l>(UT, -.1\m ~ - 1938 (1938 'I>'\ 4 )'!>'t ,im 42 '1fl!!T 114 ti: -.;'t-.1\m
fqf-,<l1qq; fq'"1TI'll1N'l>(UT ~ . 1999 '!>1 'lm 14 '1fl!!T 26 ,1; WPlo-P!ITT! ~ afR ~ iITTJ Jls,! ~ 'ollfZIT1T <mt
~. -.ftm tl<'ll~'hl\ W1ffi '1; 'RJlffi ~ f-,cif<'lfolii f'1Fl'fll "'1ffiT i" ~ -

mlR1<f - <Im 111N :

l. (i) 'f'! f<lf.,qtj\ -.;'t-.1\m fsf-,,.,qq; f,a'"1TI' ll1N'l>(UT ( ~-31111>! ~ ~-.1\m tfTffi'ft 31]q(U!) ~ . f;,;f.i,rq-,20 I 0
,1; 'lT'l ~ 'J'PRT '0!1'l'TI I
(iiJ '! ~ ri,r q;( ,i; - 'I>'\~~~
~ ,j; ,;ti -q 3l'I ~ 1<lfu! 'lit'TI I
rn =0'1-... ~ 'R -.wi m m ll1N'l>(11I ~ ;;ftq:,-.ftm

2 (1) ~ ,3fflqf 3llqi/l.l'hi1I ,r,-

i '"a,i,,f-,<lq" ~ ..,f,m -.1\m ~ I 938 (1938 'of 4) i',

-
['IT'! I l l - ~ 4] 'lro! 'OT ~ : 3Wl1'1R"l 21

ii ''p1fllq;,u1•• I i ~ aft~, f'lf"<IIG<ji r<1'1im llTI'l'!i'{1IT ~ . f;ml!il'lo'! 'lRT 3 "1\'1-a<NRT (I) -q; ~aftil, fo1f"<11qq;
r<1'1im llTI'l'!i'{1IT ~ . 1999 ( 1999 "'1 41) 1ml §~ t I
iii ••ijrilrqq ~ -itt r.m:r" ~ "I\'\ = *
64 aft aft <2i ~ ~ 'liT 'f"'R 111'<! m ,tt ful>f
iv ",mm '11ft ~-3l<lfq '!l1!ffef '1" 'itt r.m:r" l.r ~ t" l!<il'R t" ~. ~ fuf.! 'iJfil ~ ~ -
~ <i1!1l'!mt"l\'\--31'1N~ m"l\'\<i'Rflll'<l'li'{ffi't, _ ~st-~~*~
-.rr-31'1N~ *~~31'1N"'1"1Tl!f'l'IF!~'l'llt"IT>ft~g),
V. ''f'IT ~ " Ii ~ ~ 1ml f.r-!T ~ '"11"! 3N<'ll ~ 'q; ~ ~ ml>f "'1 R>IR1JT f;m 31'IN it 'ITffll\ 'liT
iFff ~ a,,m>i * *
~ ,i,'t 'ffiIT ~ 'l'll'l "!RT~
vi. "w.n-nfqll'lll'<I'" Ii~~~ Ii t 'iJfil ~ ~ "'1 'f@R 'ffl ~ 'fflffl • '!>'fl 31'IN ~ l!'!r
,m ~ 'fflffl - ~ Ii ~ ,i,'t --31'1N ~ ,i,'t <l'l'!l 111'<! ~ f;m!liT l!1'll'lR r<ffi<i1! 5 .. ~fo1f"<1q
(J)it~'l'llt,
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vii "~-afif '!l1!ffef illftr" Ii ~ ~ ,i,'t ~ Al¼ Ii t "IT '1'n lf{'I; '{lJt t W-lT l,!"'1 f.!q\ur '3'! --31'1N
~ Al¼'F"'*~'l'lltflr-1"'1R'll'{Uil.r~* ~mt,
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~ Ii 111'<! lITTG'!>ii
'liT ~ mr ~ - ~ 'l>T il\m >ft "11'11'1T g)"" 'f"'R om~ 'O!! <l'olll 'l>'fflmlf - 3l"l
'l>Ti &tl'fif?i.¥m f,m 'IR'm\ 1ml ~ !!GR ~ '1'11 gJ I
ix "'lllfflil 11i1 'J'i,.-1'1' 1 Ii ~ aftqr qiffl 1ml '!'R'!1m "'1 'fl:Sl'o<'I~ 'IR'!T "IT~ "'1 'f@R '! m -q; "'1<1lT ,irn\,rn
j '11{ ,ft ,Nt.<'fl'it t" mo!, ~ <'fl'it mo!, - * - ~ 'liT{ j, " ' - ~ ~ i t ~ WT I <NI~
<l'IT3l"l'F"'>lli'<!..,vtt-~•'IR'ml'lill1lll<l'!T~t'~g),~i;:ro-'l>'\'llt<fl'I!,~
"'1 ,;wlR' ;r-r@ rt ;frqrq,ffl ~ ,i,'t aftqr '111'@1 ,ift ~ 'liT ~ Tiffl -q; ~ . gJ I
x. " ~ filf!l'' '# ~ ~ f.d>r '# t f;mqiJ <iu\'! &tli&tTm! (aftqrq,ffl 'I>'\~.~.- wr-i lff'!ffl)~ 11-1!
r<ffi<i1! 2000 it ~ '1'11 t° I
xi •'hffl.3l<lfq '!l1!ffef ll'ffl'" Ii ~ ~ JNR t "IT~ it ""1>ft 'l1t '!fl'!r Ii ""lro om WT ,lqiffl ~ >1.,f.!.,,u,
~ - ~ 3N<'ll ff'lf>! 'F'I it ll1lm1r * <"I it~ '1'11 t, f,;m 'R·~ lllfi:rq,r'IR'm\ i t - - ~ ~ *
~ l'l'TI'ff 'Oil <l'liffl tI
(2) ll'TT'1 Iii;;) '1'l ~ <l'IT lli'U 'lil ~~it~ 'ffl ~ '1'11 t° I ~ 'a;t ~ - aftqr

(3) r<l'lim ~ ~ . I 999 (I 999 "'142) i t ~ ~ '1'11 t° Il'l'lil &tliJll;'ffl<!it Wl'Tl"IT'ff'3'! ~

31'[qf ffi <l'ff ~it~~ WT i t ~ ~ '1'IT t,
'f'llnfv
3. ~ - ,tt 'li« aftqr '1!Mm'11 it '!>'fl 31'IN ~ t- 'f"'R t- ~ f~"1f<'lf&a M :-
i. 'iJfil ~ 'llm>!i 311'1R 'lI ~~;;partl'it 15~,
ii. 3l"l <N! l!1lll'IT it 30 ~ I

a..n1...11i- ~ • ' -•~~

fiiilr "1'l'mft

4. '!'R'!lm ,m,i; --ami ~ "' f~"1f<'lf&a ii *M '1'n ~ 'liT mllR'! ~ t- ~ <l1TI! ~ 1

(i) 1<R'lm\ ¥i 'fl:Sl"l<'I~ o1'l'-lT
(ii) f.r-!T M ~ ~ t- ~ i t * ~ <"I* tH 'I>'\ f.l.,;m't
~ • 'fl:• ....., 4" ~ aft1ullnfl • ~
22 THE GAZETTE OF INDIA : EXTRAORDINARY
[PART III-SEC. 4]
s.-m 'llff lfi'l >'l~ ~~l f~.~ f.!c r~~ -aa m~
~lfi l~m 'l'l~ f<l; "IT ~
fl!;~ ~4i lo'f fl'lf ~'"1 -"3 o!~ I
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'"1ll'll'T'RI

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~4 •~~ (ii) '!;~ tli;, nt1

- : 'llffl fi-.. r~~ "lil< ffi~~ -..r 'll'TW TT"l'll l'f ~ll ilt'I '"f
~~- ..rll 'll'T 'ltl'lmll
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"@11 ffl >f; ~ Ml'J llF'lt -;;nif,ft I
(ii) "lil'llfflfi ~ ~~ "J'lffl t fl!; 'l1fflfi "'' 'fl:llil<'i'I llJ;,ir
"11\t l'f'll ~ 3IT'R1JT,); - ~ ~ il f.l;m il
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( 2 ) ~ , _ - ~ ~ ,);~i l >R- ~ ~ - ~ ~ o q f , i ; l f i l ~ 3ifu'f m'l<f11< -3l'llll

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~ti 3.5 ll!l!>ri-..r 'IR'!iffi 'lrnf ~
.

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"{lli\ '1{ ~ lfiT TI! llilm: l! 11iffi! llJ;iir oWl'ir- $IT f<I; ~
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i. ffl-3!<lfu ~ 1§;¼ ~ ~ ~,); ~ 1fl:int<! M ~ - · a<IF'!'!, 'l1fflfi

~ilM l!'fg ) I ..., lli/ll<lf""' ilYIT 3111fif?i:tqi ..,,t 'f;
ii ffl-3!arfir ~ 1§;¼ lfiT TI! -....11: - °OfPi qR'IRfl tlR'f; ~ lfiT 11."T 3l<IN 'f; ~ "!RT ~,); ~ llftlf ...t I
iii 'l• <jf"i/lR.n ~'I> '\~~ 1§;¼ ~ l§"li ffll
iv ffl-3!'1iir ~ iri lfiT ffl -,.,i;rr - 'I>'\ ~·..,q m;f l'f'll 1" 'I>'! ~ ~ ,); am ti ~
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f<;'! l! {ffl>f; fidli'l'I,); llfllm,); ~ -q} ~ ~ '1f ~ l! ~ ' I ~ : -
[ '11'1 I I I - ~ 4 l 'l1«l <Iii '"""" : arnNR"I 23

'lil'11fflll'l>'l~"lot*~
~ --~~ig,t ~ ~--~~ig,t~
~~ "\S'l'I 25,000/- o,i; ~ ~ ~ " " " 25,000/-'!\ ~~
--~.ra:im~~
1 20% o,i; * (~ 3l'l'IT ~ ) ~ 6% o,i; * (~ - ~ )~
'!\ ~ ~ 3 0 0 0 '!\ ~~ 6000/-

2 15%o,i;*(~-~)~'!\ 4%o,i;*(~-~)~
~~2000 '!\ ~~ 5000/-

3 10%o,i;*(~-~)~'!\ 3%o,i;*(~-~)~
~~1500 '!\ 3lN~"q ~.4000/-

4 5%o,i;* ( ~ - ~ ) ~ ' ! \ 2%o,i;*(~-~)~

~~-1000 '!\ ~ ~ 0 0 0 / -

5ll'IT ~ ~Jrl" ~Jrl"

~-~~
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~ ~ u;q; '11fflll "$fflr-~~ ~ ~ - - ~ ~ 1F¼lfi1~lfi1 ~ wrr""' -~ iF¼~

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(ii)3!"f

(2) ~ illT 'Im! 'I>'\ '1t ~ - '""1ffi-~ ~ '11ffll\ AN'' 1l ~ "lot 1l ..,1~iall:11 ,tilt lfi1 ar.i'T iro 1l
b1'1T"IRT~I

(3) \'ffli 'I>'\~ 'If~ ftotfil"<t R~ll,,,,01 fil;,f ""IR ~ I

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- - ~ ~ '11fflll lTtflr.r t ~ ~ 'tiT ai.fr '11fflll = lfi1 3l'l'IT ~ rm ;;iflm 'llllfu; lfi1 ~ "!RT t "'m
24 Tiffi GAZEITa OF INDIA : EXTRAORDINARY [PARr III-SEC. 4]

'll\ lll'«'ll '1 ~ ~ ~ 1@ 'f< ~ R"1 ~ lm'l\'I ml ~ I

(il ~ ~ m h =
(ii) fitfll'l'l' 11>'\ 3!1wft ~ fuf.r
'Pf fitfll'l'l'

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(V) 'Pf f.11¼ 'i<"f
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1NR ri fu ~ ~ 'lR'ml>ii lf cllqffl - ~ lf ~ -.it 11>'\ -ii<r ffi 1<'{ "3f..om .ft m1?:'""'
ffi ,); ~ ~ q;i: ~ ti
(ii) ft'll?: "SIJ1<f ffi,); ~. >llfll'fi(UI ~ "'fiT ~ 3!<ffl"\ l!';R 'Im!~ ft'llt,); ~ 'f< ~ "<re lRiFf ffi 'iii 3!<ffl"\
l!';Rm 31'1<1T~'iilm~f'li--3TelN~JNR. 'iil"'fi'!'iilll'IT 3lfaftmJNR-.,)~~'f< W11'lT
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11. f<1f~qq.jj ii; mft ,l\ ~ 31'1<11"6Z!1@1Tlf ~'iifd➔l-<il il;Rlll(tlT,);~ ll1N"""1-:ffe.~ .iq~'fi\UJ 31'1<11~
"ilfil..,,ft ,lt-~"fR'lq;i:~t-,

-i\. m "'ITTflf"!, 31"11\l

[flr.ntr,, IIl/4/16l/10/3l<ll.]
['ll'T I I I - ~ 4] '<IRl! <fi'T ~ : 3l\'!l"lR"I 25

NOTIFICATION
Hyderabad, the 1st July, 2010

tment of Discontinued Linked

Insurance Regulatory and Development Authority (Trea
Insurance Policies) Regulations, 2010

rs conferred by clause (zd) of sub-

F. No. IRDA/Reg/2/52/2010.- In exercise of the powe
with sections 14 and 26 of the
section 114A of the Insurance Act, 1938 (4 of 1938) read
I 999 (4 of 1999), the Authority in
Insurance Regulatory and Development Authority Act,
y makes the following regulations,
consultation with the Insurance Advisory Committee, hereb
namely:-

Short title and commencement

(I) These regulations may be called the Insurance
Regulatory and Development
1.
es) Regulations, 2010
Authority (Treatment of Discontinued Linked Insurance Polici
cation in the Official Gazette
(2) They shall come into force on the date of their publi
cleared by the Authority
and shall apply to all products of linked life insurance
thereafter.

Definitions:
2. (1) Unless the context otherwise requires,-
i. "Act" means the Insurance Act, 1938 (4 of 1938).
lopment Authority established
ii. "Authority" means the Insurance Regulatory and Deve
latory and Development
under sub-section (1) of section 3 of the Insurance Regu
Authority Act, 1999 (41 of I 999)
provisions of Section 64 VB (2)
iii. "Date of payment of pre19ium" shall in terms of the
the insurer.
of the Act mean the date on which payment is reS!)i'lled by
" shalv fur the purpo se -of these regulations, be
iv. "Date of discontinuance of the policy
the insured or policyholder
the date on which the insurer receives the intimation from
notice period provided for
about discontinuance of the policy or on the expiry of the
whichever is earlier.
in the sub-regulation (I) ofregulation 5 of these regulations,
"Grace Period" means the time granted by the insure
r from the due date for the
v.
ty during which time the
payment of premium without levy of any interest or penal
ut any interruption as per
policy is considered to be in-force with the risk cover witho
the terms of the policy.
could arise on account of non-
vi. "Discontinuance": means the state of a policy that
y of the notice period
payment of the contracted premium due before the expir
tioins .
provided for in sub regulation (I) of 5 of these regula
26 THEGAZETTEOFINDM:EXTRAORD™ARY [PART lII----SEc. 4]

Provided that no policy shall be treated as discontinued if, within the grace period,
the premium has not been paid due to the deitth of the policyholder or the insured or
both or upon the happening of any other contingency covered under the policy.
vii. "Discontinued Policy Fund" means the segregated fund of the insurer that is set
aside and is constituted by the fund value of all discontinued policies determined in
accordance with these regulations.
viii. "Lock-in-period" means the period of five consecutive years from the date of
commencement of the policy, during which period the proceeds of the discontinued
policies cannot be. paid by the insurer to the policyholder or to the insured, as the case
may be, except in the case of death or upon the happening of any other contingency
covered under the policy.
ix. "Revival of a policy" means restoration of the policy by the insurer, which was
discontinued due to the non-payment of premium, with all benefits, with or without
rider benefits if any, mentioned in the policy document, upon the receipt of all the
premiums due and other charges if any, as per the terms and conditions of the policy,
upon being satisfied as to the continued insurability of the policyholder on .the basis of
the information, documents and reports furnished by the policyholder.
x. "Segregated fund" means the funds as referred to in Schedule II-A of the !RDA
(Assets, Liabilities and Solvency Margin of the Insurers) Regulations, 2000.
xi. "Discontinuance charge" means a charge that does not exceed the limits specified in
these regulations, expressed as a percentage of one annualized level premium or fund
value that can be levied upon discontinuance of a non-single premium policy.

(2) Words and expressions used and not defined in these regulations but defined in the Act, or
the Insurance Regulatory and Development Authority Act, 1999 (42 of 1999) shall have the
meanings respectively assigned to them in those Acts or the rules and regulations made there
under, as the case may be.

Grace Period
3. The grace period for payment of the premium for all types oflinked insurance policies
shall be as follows:-

i. Fifteen days, where the policyholder pays the premium on a monthly basis;

ii. Thirty days, in all other cases.

Options of a policyholder upon discontinuance of the policy

4. A policyholder shall be entitled to exercise one of the following options upon the
discontinuance of the policy:

(i) Revival of the policy, or

(ii) Complete withdrawal from the policy without any risk cover.

Obligations of the insurer for revival of the policy

S. Where a policy is discontinued, the insurer shall take the following steps to enable the
policyholder to exercise the option as available in terms of regulation 4:
 'II
[ '11'1 I I I - ~ 4 l

of expiry of grace period to

(i) Send a notice within a period of fifteen days from the date
perio d of thirty days of receipt
such a policyholder to exercise the said options within a
of such notice.
n within the stipulated
Provided that where the policyholder does not exercise the optio
to have exercised the option
period of thirty days, the policyholder shall be deemed
mentioned at sub-regulation (ii) of regulation 4.
segregated fund ch~sen
Explanation: The fund value of the policy shall ,be part of the days of notice
y of thirty
till the policyholder exercises his/her option or till the expir
perio d the policy is deem ed to be inforce with
period which ever is earlier. During this
risk cover as per terms and conditions of the policy.
policy, the risk cover along
(ii) Where the policyholder exercises the option to revive the
able charges as per the terms
' with investments made in the segregated funds, less applic
and conditions of the policy, shall be continued.

policy
Obligations of the Insurer upon complete withdrawal of the
available at sub-regulation (ii) of
6. (I) Where the policyholder exercises the options
terms of the proviso to sub-regulation
Regulation 4 or does not exercise the op\ion available in
credited to the discontinued policy
(i) of regulation S, the fund value of the policy shall be
ded only upon completion of the
fund. The proceeds of the discontinued policy shall be refun
shall also be apportioned to the
loclr. in period. The income earned on the fund value
the shareholders.
discontinued policy fund and shall not be made available to
e or demand draft, to be delivered
(2) The insurer shall refund the amount by means of a chequ
to the insured or the nominee, at his last known addre
ss or by any other electronic mode of
ance charges on the date of
payment. However, the insurer may deduct discontinu
d the charges stated in sub-
discontinuance on such policies, which shall, not excee
regulation (v) of regulation 7 ofthe se regulations.
the insurer shall not refund
Provided that in case of pension and annuity linked products,
while the remaining amount
more than one-third of the proceeds of the discontinued policy
of Section 4 of the Act.
shall be used to purchase an annuity subject to the provisions

Explanation:
(i) "Proceeds of the discontinued policies" means
ed, after addition of interest
The fund value as on the date the policy has discontinu
computed at the minimum interest rate of 3.50% p.a.
said proceeds shall be set aside and
(3) Where the insured or his nominee cannot be traced, the
its age wise break-up. The insurer
shown separately in the annual report of the insurer with
income of the shareholders or to
shall not write back or apportion the said proceeds to the
shall be dealt with in such manner
that of any other policyholder. The proceeds so set aside
as may be specified by the Authority from time to time.
y
Obligations of an insurer upon disco ntinu ance of a polic
shall be as follows :-
7. The obligations of the insurer in this regard
p expenses incurred towards
i. To impose discontinuance charges only to recou
o.
procurement, administration of the policy and incidental theret
28 THE GAZETTE OF INDIA: EXTRAORDINARY [PART JII-SEt. 4]

ii. To design the discontinuance charges to encourage the policyholder to continue with
the contract for the full tenn;
iii. To ensure that the discontinuance charges reflect the actual expense s incurred
iv. To structure the discontinuance charges within the statutory ceilings on commissions
and expenses and
v. To ensure that the charges levied on the date of discontinuance (as a percentage
of
one annualized premium) do not exceed the limits specified below:-

Where the policy is Maximum discontinuance Maximu m discontinuance charges for

discontinued charges for the policies having
during the policy annualized premium up to
vear Rs.25,000/-
Lower of 20% • (AP or FY)
subject to a maximum of Rs.
I 3000
Lower of 15% • (AP or
FY)subject to a maximum of Rs.
2 2000
Lower of I 0% • (AP or FV)
subject to a maximum of
3 Rs.1500
Lower of5% • (AP or FY)
subject to a maximum of
4 Rs.1000
5 and onwards NIL
AP - Annualised premium
FY - Fund value on the date of discontinuance
the policies having annualized
premium above Rs.25,000/-
Lower of 6% • (AP or FY)_ subject to
maximum of Rs. 6000/-
Lower of 4% * (AP or FY) subject to
maximu m of RS. 5000/-
Lower of 3% • (AP or FY) subject to
maximum ofRs.40 00/-
,
Lower of2% • (AP or FY) subject to
maximum ofRs.20 00/-
NIL

Provided that where a policy is discontinued, only discontinuance charge may be levied by the
insurer, and no other charges by whatsoever name called shall be levied.
Provided that no discontinuance charges shall be imposed on single premium policies and
on top ups.

•
Disclosures relating to discontinued policies
8. (I) The funds arising from discontinuance policies shall be shown under a separate head in
the Balance Sheet in the following manner:

Funds for discontinued policies

(i) Discontinued on account of non-payment of premium;
(ii) Others

(2) The amount refunded to the policyholders and amount transferred to the "Funds
for
discontinued policies" during the financial year shall be shown under a separate head.

(3) The following disclosures shall be made in the notes of the accounts
(i) Number of policies discontinued during the financial year;
 29
[ "11'1 m -= 4 J
(product wise) during the year;
(ii) Percentage of discontinued to total policies
ved during the year;
(iii) Number and percentage of the policies revi
nued policies.
(iv) Charges imposed on account of disconti
within fifteen
Eve ry insu rer shall send a state ment of account, on a half yearly basis, are
9.
ect of ever y poli cy in forc e including discontinued policies where the proceeds
days, in resp wn address,
nominee as the case may be, his last kno
yet to be paid to the policyholder or her
:-
which shall contain the following details
r
(i) The total premium paid by the policyholde
(ii) Next due date of the premium
(iii) Pattern of the investment chosen
(iv) Pattern of investment
(v) Status of the policy
(vi) Total fund value
(vii) Total units
(viii) Detail of charges recovered.

Action in case of default

officer of the
10, (i) The Authority may, at any
time, by an order in writing, direct any
rt on the reasonableness or
affairs of any insurer and submit a repo
Authority to inspect the treatment of
tment of all discontinued policies and the
otherwise of discontinuance charges, trea
the proceeds thereof.
to the
hority shall, after giving an opportunity
(ii) Upon receipt of the report, the Aut ct
mak e a repr esen tatio n in connection with the findings in the report on the, dire
insurer to imposed,
charges and refund the excess charges so
the insurer to reduce the discontinuance
to the policyholder

against the
Authority may also initiate such action
(iii) Without prejudice to the above, the Insurance
under the provisions of the Act, the
said insurer, as deemed appropriate, framed
ulatory and Dev elop men t Authori ty Act, 1999 and the relevant regulations
Reg
thereunder.

tions
Power of the Authority to issue clarifica
n of any of
respect of the application or interpretatio
11. In order to remove any difficulties in tions or
provisions of thes e regulations, the Authority may issue appropriate clarifica
the
guidelines, as and when required.

J. HARJ NARAYAN, Chairman

[ADVT. IIl/4/161/10/Exty.]

*****