Insurance rules are the kind of thing people read once at purchase and never again. That’s usually fine, except this year the gap between what you remember agreeing to and what’s actually in force has gotten wider than usual. Life insurance conditions were overhauled in your favor. Car insurance costs moved the other direction. And a tax change arrived that helps a lot of people, but not everyone, depending on exactly what kind of policy they hold.
Life Insurance: The Rules Quietly Became More Generous
IRDAI’s Master Circular on Life Insurance Products reshaped several conditions that used to favor the insurer by default. The free look period, the window during which you can cancel a freshly bought policy and get a refund, was extended from 15 days to 30. That’s double the time to catch a policy that doesn’t actually fit your needs before you’re locked in.
Surrender value changed too, and in a meaningful way. If you exit a non linked savings policy early, it now acquires a surrender value after just one year’s premium, down from the three year threshold that used to apply. Insurers are also required to disclose the year wise guaranteed surrender value and special surrender value upfront, in the benefit illustration, rather than leaving you to work it out from dense policy wording later.
Perhaps the most practically useful change:
Policy loans are now mandatory on all savings linked life insurance products. That means if you need liquidity, you don’t have to surrender a policy you’ve held for years and lose its benefits. You can borrow against it instead.
On the claims side, insurers can no longer reject a claim purely for missing documentation, and if an insurer ignores an ombudsman’s ruling for more than 30 days, they face a running financial penalty. These are real protections, not cosmetic ones.
The one caution worth holding onto premature policy surrenders are still rising, now accounting for 39% of total benefits paid out, driven largely by financial stress and mis selling. Better exit terms don’t fix a policy that was wrong for you in the first place. If an agent sold you something that doesn’t match your actual goals, use the improved free look and surrender terms to correct that, rather than treating the better terms as a reason to stay in it longer.
Car Insurance: No Equivalent Relief
Motor insurance hasn’t seen the same policyholder friendly shift. Third party cover remains legally compulsory for any vehicle on a public road, and a proposal under consideration for this fiscal year would raise third party premiums by 18 to 25 percent. Separately, the compulsory personal accident cover for owner drivers jumped from a 2 lakh sum insured to 15 lakh, which pushed its annual premium from around ₹100 to ₹750.
