The Insurance Regulatory and Development Authority of India (IRDAI) has relaxed the norms for senior citizens for submitting separate proposal forms for purchasing immediate annuity products from proceeds of the National Pension System (NPS).
The IRDAI announced this in a circular on September 13, 2022. At present, NPS retirees submit an exit form to NPS, and a proposal form to insurers at the time of superannuation.
Now, the edit form of NPS will be treated as a proposal form for purchasing annuity, thereby reducing the time and effort of senior citizens as well as the insurers. Also, in order to increase the adoption of technology, insurers have been advised to adopt Aadhar-based authentication for verification of life certificate, such as Jeevan Pramaan, a Government of India (GoI) initiative on biometric-enabled digital service.
In addition, IRDAI has also mentioned about immediate annuity products offered by the life insurance companies to the subscribers of the NPS retirees.
Immediate Annuity Products
In order to offer immediate annuity products to the subscribers of NPS, life insurance companies, in accordance with Regulation 8(1) of IRDAI (Protection of Policyholder’s Interests) Regulations, 2017, are using a proposal form to facilitate the purchase of annuity products. In this regard, all insurance companies offer immediate annuity products and collect proposal forms from the NPS retirees.
However, it has been observed that the Pension Fund Regulatory and Development Authority (PFRDA) is collecting exhaustive exit form from the NPS retirees, which captures necessary details which insurance companies require in the proposal form, according to the IRDAI circular.
Now, in order to facilitate the ease of doing business and simple onboarding of NPS retirees for immediate annuity products, after due consultation with the industry, IRDAI, in exercise of power conferred under Section 14(2)(e) of the IRDAI Act, 1999, and Section 34 of insurance act, 1938 has issued the following direction:
It said: “The exit form submitted by NPS retiree must be considered as the proposal form, for offering the immediate annuity product by the insurance companies. In order to facilitate ease of living for all senior citizens who are receiving annuity payments, the current framework of Aadhar based authentication for life verification certification, such as Jeevan Pramaan, a Government of India initiative on biometric enabled digital service for pensioners, to be adopted. In this regard, the requirements of Section 41 and Section 45 of Insurance Act 1938 shall be considered as compliant as no direct solicitation of business is involved. The circular comes into force with immediate effect.”
