Insurance Regulatory and Development Authority of India (IRDAI) has notified a host of regulations, including on surrender charges, wherein insurers have to disclose such charges upfront.

The IRDAI (Insurance Products) Regulations, 2024, merge six regulations into a unified framework. This is aimed at enabling insurers to respond to evolving market demands swiftly, enhancing the ease of conducting business and boosting insurance penetration.

These regulations promote good governance in product design and pricing, including strengthening the principles governing guaranteed surrender value and special surrender value, along with disclosures thereof, the IRDAI has said in a statement.

It also ensures that insurers adopt sound management practices for effective oversight and due diligence, it has said.

These regulations, which will be effective April 1, 2024, stipulate that the surrender value is expected to remain the same or even lower if policies are surrendered within three years of the purchase.

For policies that have been surrendered from the fourth to the seventh year, the surrender value may see a minor increase, it has said.

A surrender value in insurance refers to the amount paid by insurers to policyholder upon terminating the policy before its maturity date. If a policyholder surrenders during the policy tenure, the earnings and savings portion will be paid to him or her.