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IRDA Plans Mandatory Life, Non-life Merger

The plan is expected to identify premium for each risk and allow life insurance companies to underwrite only life risk, while health insurance providers to underwrite only health portion

The Insurance Regulatory and Development Authority (IRDA) has proposed a tie-up between a life insurance and a general or health insurance company, mandatory for any policy that integrate health insurance and pure term life insurance – reported Business Standard.

The plan is expected to identify premium for each risk and allow life insurance companies to underwrite only life risk, while health insurance providers will underwrite only the risk of the health portion of the combined products.

The insurance regulator has laid out a detailed proposal, which has been circulated among Chief Executives of all insurance companies seeking their views. The companies have to submit their views before June 29.

IRDA said: “It is proposed to restrict the policy term to at least three years and cap the maximum sum assured at Rs 3 lakhs in these classes of products. The sum assured limit of Rs 3 lakh is to be reckoned separately for pure term life insurance and health insurance portion.”