Life insurance: IRDAI retracts on low surrender value proposal; know applicable surrender charges from April 1, 2024

IRDAI has retracted its earlier proposal to significantly increase surrender values for life insurance policies and, from April 1, 2024, has largely maintained the existing surrender value norms. Policyholders surrendering their policies in the second, third, or between the fourth and seventh years will receive 30%, 35%, and 50% of total premiums paid, respectively, with a higher percentage (up to 90%) in the last two years of the policy term. The new rules are a relief for insurers, as the expected reduction in surrender charges did not materialize, and policyholders should be aware that surrendering early still results in substantial deductions from the premiums paid