Insurance regulator IRDAI has permitted insurance companies to make modifications to group credit life schemes issued by them in order to align the cover available under such schemes with the revised loan repayment schedule for members who have availed of the facility of moratorium announced by the RBI in the wake of the COVID-19 pandemic.
Group Credit Life Scheme is an insurance plan for banks/financial institutions to secure their lent assets with life cover against loan.
According to IRDAI, life insurers offering this scheme, where under, the members have availed moratorium on payment of EMIs would be allowed to suitably modify the term and sum assured under such schemes against collection of additional premium as may be required.
The modification will be limited to the extent required to ensure that the coverage under the scheme matches the revised loan repayment schedule.
Also, life insurers will have to price the cover for the extended period on the same terms as the original cover.
The difference in stamp duty shall also be remitted as applicable and a suitable endorsement shall be made on the Master Policy Document.
IRDAI’s move comes after several life insurers had made representations seeking permission to make certain modifications in the Group Credit Life Master Policies in accordance with the terms and conditions of the moratorium announced by the RBI. On May 22, the RBI had announced an extension of the moratorium on term loan EMIs till August 31, 2020.
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