The Insurance Regulatory and Development Authority (IRDA) has told changes made to the rules on plan of extra security items in the paper in February 2013. All current gathering items will stand pulled back from 1 July 2013 and every single individual item from 1 October 2013.

These rules, compelling October 2013, intend to make protection strategies friendlier.

The new guidelines introduced have three broad categories of products i.e.
Traditional Insurance Plans,
Variable Insurance Plans (VIPs) and
Unit-Linked Insurance Plans (ULIPs).

Traditional plans: According to the rules, the item outline of conventional arrangements would remain practically the same. These arrangements would keep on coming in two variations: Participating and non-taking part arranges.

ULIPs: if there should arise an occurrence of ULIPs, life safety net providers will now need to advise policyholders of the lessening in yield of their ULIPs on a month to month premise. Diminishment in yield—contrast amongst gross and net yields (communicated in %)— alludes to the bringing down of venture development inside a store because of different charges.

Variable insurance plans: The rules have said that VIPs will ensure a specific least rate of return toward the start of purchasing an approach—however they are connected to a file. As VIPs will be dealt with at standard with ULIPs, those items will take after a similar commission bundle for ULIPs. Under connected items, operators are qualified for commission of up to just 10%. The charge structure and discontinuance standards of VIPs will be in accordance with ULIPs.

Reduced commissions
The IRDA guidelines have reduced commissions on short-term policies and have linked the quantity of commissions to the premium paying period for all products.
Agents of single premium non-pension products will receive remuneration of up to 2% of the premium paid. In case of regular premium insurance policies, a policy with a premium paying term of five years will pay up to 15% in the first year, 7.5% in the second and third year and 5% subsequently. As the premium paying term increases to 12 years and above, the commissions payable in the first year increases up to 35% in case the company is at least 10 years old and 40% in case the company is less than 10 years old. The regulator has framed the entire format on the basis of tenure of the policies
In case of direct sale of products, such as the online mode, there will be no commissions and this benefit will be passed on to the policyholder.

Death benefit & surrender value
The minimum death benefit in case of VIPs and ULIPs is the policy account value or higher of the two. The minimum guaranteed surrender value for traditional plans has been increased. For traditional plans, with a premium paying term of 10 years or more, there will be a guaranteed surrender value after three years. For premium paying terms of less than 10 years, the guaranteed surrender value will accrue after the second year. This guarantee surrender value will be 30% of total premiums paid.
Currently, the guaranteed surrender value is usually 30% of all the premiums paid minus the first-year premium and is paid only if premiums have been paid for three years. According to the new guidelines, the surrender value becomes 50% between the fourth and the seventh years, after which the insurer would have to file a surrender charge that needs to be cleared by the regulator.

Health insurance
The IRDA in February 2013 has also issued guidelines to standardize health insurance in India. Now, all health insurance policies would be renewable for lifetime and will have an entry age of at least 65 years. All policies except customised ones will be renewable for life time. Insurers have to settle claims within 30 days after the receipt of all the documents. The IRDA has introduced 15 days free-look period—A period where a new insurance policyholder is able to terminate the contract without penalties such as surrender charges.
In case of a claim, no-claim bonus can be reduced proportionately, however it won’t be zero. In a health insurance policy, when a renewal is made without any claims in the preceding period of the policy, the insurer offers a bonus to the policyholder. This bonus is usually in the form of a discount in the premium around 5% for every claim-free year. The bonus can go up to 50%, provided no claim is made for 10 consecutive years. Any discount or loading in the renewal premium will be mentioned to the policyholder at the time of policy renewal.