Insurance Regulatory and Development Authority of India (IRDAI) in its latest draft guidelines has proposed the option of settlement of claims in installments when it comes to personal accident policies issued by General and Health Insurers and Benefit Based Health Insurance Policies. Post the happening of any contingent, insurers would be expected to offer an income in the hands of the claimants for a reasonable period of time on the happening of the contingent event insured under an underlying policy. “It is further considered that this option may enable policyholders of benefit based health insurance policies get a stream of income over a predetermined period of time post triggering of claim,” reads the circular. Here the policyholders would be given an option of choosing either settlement of claim in lump-sum or in equated installments or both
in parts.

This proposed guideline is extended towards all insurers who offers personal accident and benefit based health insurance products and fixed benefit components of indemnity products or fixed benefit riders or add-ons attached to indemnity policies of both individual as well as group products. As part of the product design, policyholders also has an option to choose the combination of both the options i.e., a percentage of the sum assured as a lump-sum payment at the time of claim and the balance sum insured in installments for a definite period of not exceeding the time limits. Also the policyholders would be provided in choosing the periodicity of the installment, which can be on monthly or quarterly or bi-annual or annual basis. This arrangement should be disclosed under the policies terms and conditions of the policy. When it comes to the pricing of options, the premium rate shall be same for both the options. However, the total claim amount payable in installment option shall always be higher than the lump-sum option, stated the circular.