*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
The Adhaar Card buzz is everywhere these days. Starting from your bank accounts to your mobile connection, Adhaar linkages are mandatory. The insurance sector is no exception. As per the latest update, Insurance Regulatory and Development Authority of India says that policyholders- general and life- are now required to link their policies with Adhaar Card. However, the deadline to link your Adhaar is December 31, 2017, IRDA has already instructed the insurance companies to implement to rule without waiting for further instructions. The initiative is welcomed by the insurers as it will decrease the number of fraudulent claims and increase effective settlement.
The only problem that may arise is the deadline. Many are wondering how to finish everything on such a short deadline, with not even two months left to go. Many are concerned about what will happen if one fails to link the Adhaar card within the stipulated deadline.
As per the latest guidelines received by the insurance companies, the policy will be active, provided one collects KYC documents from the insured at the time of policy renewal.
Health insurance policy holders need to be particularly careful as, in case any claim is filed while their Aadhaar card is not linked to their KYC documents, the insurers will have no choice but to reject the claim, even if all other conditions are satisfied.
However, the insurance industry has been seeking an alternative, but until then there is no choice but follow the new rules. Hence, it is mandatory to link your Adhaar without fail before the deadline and avoid any hassle during a claim. This instruction is equally applicable to general and life insurance policies such as term, health, travel, motor and home. There are 24 life insurance companies and 33 general insurance companies, operational in India that are being instructed to implement the same.
In its announcement, IRDA mentioned Central government’s newspaper notification published in the month of June 2017, made Adhaar and PAN KYC mandatory for availing any financial services including insurance companies as per the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017.
Reserve Bank of India replied saying that linking Adhaar Card to bank accounts is mandatory in applicable cases under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017. As it has constitutional force, banks have to implement the instructions at the soonest.
While linking with Adhaar Card is beneficial, it is challenging at the same time. Since the process of linking Adhaar to insurance policies has not been decided yet, the experts say it would be similar to the formalities done by banks. However, to make it simple, Adhaar card either can be linked via messages from your smartphone, online or by visiting the branch of the insurance company.
The motive of linking the Adhaar card with insurance policies will be helpful during claim settlement to prove the identity of the applicant. It will reduce fraud claims and hasten the claim settlement process. Most of the insurers have considered this move as a welcome announcement. It will definitely help in restructuring the insurance KYC process later. Every new thing faces challenges in the initial stage, but in the long run, it is a win-win for both parties, the insurer and the insured. After completely implementing the process, the customer authentication will be simple. It will make the whole claiming process efficient at the time of on-boarding a policyholder to settling claims and thus offers an excellent customer experience.
However, mixed reactions have been noted. Some support the move while some others criticise the same on either the grounds of its deadline or the procedure. People have also raised questions about the purpose of this linking. If it is due to maintaining the database, other ways are also available which might be less contentious. As we have no choice to but to link our policies with our aadhaar cards now, we can only wait to see the pros and cons as they manifest.