Date: 23/12/2009

Ref: IRDA/LIFE/GDL/MISC/087/12/2009

Guidelines on ‘Health plus Life Combi Products’: 


I.            Introduction:


1.      In response to the proposals received for promoting the combined products of pure term life insurance products offered by life insurance companies along with standalone health insurance products offered by non-life insurance companies under the umbrella of a single product, the Authority considers allowing the same as a product class within a broader policy framework of ensuring an informed choice and effective policy service to the policyholders. It is envisaged that the proposed product class enhances the penetration of personal lines of insurance business with a wider product choice to policyholders. While the Authority adopts a business facilitative approach, it is expected that all insurance companies will put in place prudent market conduct practices and operational procedures for protecting the interests of policyholders.


2.      It is proposed to name this product class as ‘Health plus Life Combi Products’ referred as ‘Combi Products’ hereafter in these guidelines.


3.      These guidelines do not apply to Micro Insurance Products which are governed by IRDA (Micro Insurance) Regulations, 2005.


II.            Objectives:


1.      The market conduct practices adopted in ensuring an informed choice to the insuring public and the extant operational procedures for an efficient policy service are the minimum standards that are expected from insurance companies before considering the convergence of varying product classes on personal lines of insurance business. It is clarified that the prudential norms of reserving and solvency requirements etc. are as applicable to respective independent products. As insurers leverage on the marketing and operational network of their partner-insurers the proposed product innovation is expected to facilitate policy holders to choose an integrated product of their choice under a single roof without shopping around the market for two different insurance coverages from two different insurers. Therefore the insurers are expected to offer the best covers as an attractive proposition for the policyholders. The underwriting aspects, premium collection issues and also other policy service related issues of the ‘Combi Products’ under reference require suitable I T support at the offices of both the insurers. Hence, insurers may note that an advanced technology support is an essential pre-requisite to support the service of the ‘Combi Product class’.


2.      In accomplishment of the objectives cited the Authority issues the following guidelines under Section 14 (2) (b) and 14 (2) (e) of Insurance Regulatory and Development Authority Act, 1999.


III.            Guidelines:

       All insurance companies that promote ‘Health plus Life Combi products’ shall adhere to the following guidelines


1.     Scope of Combi Product Class:  

1.1.         The ‘Combi Products’ may be promoted by all Life Insurance and Non-Life Insurance Companies.

1.2.         The ‘Combi Product’ shall be the combination of Pure Term Life Insurance cover offered by life insurance companies and Health Insurance cover offered by non life insurance companies. Health Insurance for the purpose of this product class means effecting of contracts which exclusively provide sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient, on an indemnity or reimbursement basis.

1.3.         The Policy Term and Sum Assured limits are as proposed and cleared under File and Use norms. 1.4.         Riders / Add-on covers may be offered subject to File and Use clearance1.5.         The premium components of both risks are to be separately identifiable and disclosed to the policyholders at both pre-sale stage and post-sale stage and in all documents like policy document, sales literature etc.1.6.         The product may be offered both as individual insurance policy and on group insurance basis. However in respect of health insurance floater policies, the pure term life insurance coverage is allowed on the life of one of the earning members of the family who is also the proposer on health insurance policy subject to insurable interest and other applicable underwriting norms of respective insurers. 1.7.         The integrated premium amount of the ‘Combi Product’ shall be basis for reckoning the threshold limit / applicability of extant Regulations, guidelines and circulars etc. issued by the Authority or any other statutory body. 1.8.         Commission and Claim payouts in respect of ‘Combi Products’ shall be by respective insurers only. 1.9.         ‘Combi product’ shall have a free look option as outlined in Regulation (6) (2) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002. Free Look option is to be applied to the ‘Combi Product’ as a whole.1.10.     The Health portion of the ‘Combi Product’ shall entitle its renewability at the option of policy holder to have an independent / standalone health insurance policy from Non-Life Insurance Company of the respective ‘Combi Product’.


2.      Tie up between insurers:  It is mandatory that insurance companies offering the ‘Combi Product’ shall have in place a Memorandum of Understanding covering the modus operandi of marketing, policy service and sharing of common expenses.

2.1.         Insurers forming the tie-up shall obtain prior approval of IRDA by duly filing the copy of the agreement entered in this regard. Approval may be obtained by any one of insurers. 2.2.         A tie up is permitted between one life insurer and one non-life insurer only. Thus a life insurer is permitted to tie up with only one non-life insurer and vice-versa.  2.3.         Between these two Insurers any number of ‘Combi Products’ may be promoted. 2.4.         It is expected that insurance companies would carry out an appropriate due diligence before establishing the business relationship for the purpose of promoting ‘Combi Products’. Insurers are also expected to have a long-term understanding for effective policy service of the proposed ‘Combi Products’.2.5.         Withdrawal from the tie-up is generally not desirable. However, in exceptional cases where insurers desire to withdraw from MOU they shall obtain prior permission of the Authority.  2.6.         There shall be specific time frames / Turn around Times (TAT) to be agreed between the insurance companies as part of MOU for effective policy service, transmission of premiums received etc. at various stages of policy i.e., at pre-sale stage and post-sale stage.


3.      Lead Insurer: As two insurance companies are involved in offering the ‘Combi Product’ one of the insurance companies may be mutually agreed to act as a lead insurer in respect of each ‘Combi Product’ marketed with agreed terms, conditions and considerations. The Lead Insurer for the purpose of these guidelines is the insurance company mutually agreed by both the insurers to play a critical role in facilitating the policy service as a contact point for rendering various services as required in these guidelines. It is envisaged that the lead insurer would play a major role in facilitating underwriting and policy service. However, the role of lead insurer shall not deter in relying upon the existing operational infrastructure of the partner-insurance company for effective policy servicing of ‘Combi Products’. However, IRDA do not absolve either of the insurers in relegating the responsibility of proactive settlement of claims.


4.      Underwriting: Under the ‘Combi Product’, underwriting of respective portion of risk shall be underwritten by respective insurance companies, that is; Life Insurance risk shall be underwritten by Life Insurance Company and the Health Insurance portion of risk to be underwritten by Non-Life Insurance Company.  


5.      File and Use: It is expected that the common strength of both insurers are leveraged and consequent benefits are passed on to policyholders under this product class. Hence, to examine this aspect it is proposed that both the independent products are integrated as a single product and filed with a common brand name. Both the insurance companies are advised to carry out the cost benefit analysis from the perspective of common policyholders before filing the product. Insurers may also utilize the existing insurance products ‘as it is without modifications’ that are already cleared under the extant File and Use norms. However the ‘Combi Product’ is to be filed at the stage of integrating for getting File and Use approval irrespective of the earlier approval to either of products. ‘Combi Product’ filing shall follow the File and Use guidelines in vogue and all such guidelines that would be issued from time to time. ‘Combi Product’ is to be filed with Actuarial Department of IRDA in File and Use formats that are in vogue. The File and Use application of the ‘Combi Product’ shall also specify the proposed approach in respect of the following.

5.1.            Lead Insurer for the proposed ‘Combi Product’ and demarcation of functions between insurers for carrying out the following activities:  

a)      Procedures proposed for issuance of the premium notices, where applicable and final lapse notices in terms of Section 50 of the Insurance Act, 1938.

b)     Proposed policy service. Where the servicing is to be necessarily attended by the original insurer, the lead insurer facilitates the policy servicing. As far as the policyholder is concerned lead insurer could be made as the single nodal point for receiving the servicing requests, fulfilling the services and issuing acknowledgements.

c)      Results of feasibility study, if any, in giving a limited access to the policy data base of policies for effecting over-the-counter policy service requests to the lead insurer.

d)     Proposed facilitative role of the lead insurer in settlement of claims.

                                i.            Based on the type of claim, the other insurer shall also take proactive measures for settlement of claims. As far as health portion of ‘Combi Policies’ are concerned, they may be serviced by Third Party Administrators. Where the policies are serviceable directly, the lead insurer is to play a facilitative role.

              ii.            Lead insurer not to guarantee the settlement of claim on behalf of the other insurer. The risks accepted by one insurer under ‘Combi Product’ shall not affect the business of other insurance company.

e)      The operational procedures proposed to be put in place for timely dispatch of the policy bond of ‘Combi Products’. f)       Proposed procedures for filing the advertisements in accordance with IRDA (Insurance Advertisements and Disclosures) Regulations, 2000 within 30 days from the date of issuing the advertisement with IRDA. g)     Proposed procedures for obtaining the prior approval of IRDA for issuing Joint Sale Advertisements along with the common corporate agents.


5.2.            The results of the cost benefit analysis carried out by both the insurers.

5.3.             The modus operandi of proposed policy service at various stages of the policy viz., proposal stage, policy servicing, premium collection arrangements and claims service etc.

5.4.             The I T systems put in place for supporting the sale and policy service of the ‘Combi Products’.

5.5.            Agreement on reimbursement of expenses in consideration of common services rendered by each other of insurance companies.

5.6.            Distribution Channel wise maximum commission allowed under the ‘Combi Products’.

5.7.            The manner in which premium is proposed to be collected subject to provisions of Section 64 VB of Insurance Act, 1938.

5.8.            The procedures put in place for expeditious transfer of the portion of premium that pertains to the other insurer of the product.

5.9.            Operational procedures put in place for updating premium on policy data base on a real time basis.

5.10.        Proposed policy document

a)      As the risks under both the liabilities namely; life insurance and health insurance coverage, are assumed by different insurers it is required that policy document is to be approved at File and Use.

5.11.        Proposal forms to be used for ‘Combi Products’.

5.12.        The Terms and Conditions under which the Health portion of the ‘Combi Product’ entitles its renewability at the option of policy holder to have an independent / standalone health insurance policy from Non-Life Insurance Company of the respective ‘Combi Product’.

5.13.        Options available to policyholders of ‘Combi Products’ to discontinue either portion of risk coverage while continuing with the other portion. 5.14.        Copy of proposed common Sales Literature / Sales Illustrations to be issued by both the insurers in respect of ‘Combi Products’.

a)      Common Advertisements of ‘Combi Products’ shall be restricted to the features, terms and conditions of the ‘Combi Product’.   


6.      Distribution Channel: In light of the prevailing statutory provisions that are in place in respect of tied Individual/Corporate agents, a beginning is to be made by limiting sale of the ‘Combi Product’ through

a.                  Direct Marketing channels

b.                  Brokers and

c.                   Composite Individual and Corporate Agents,  common to both insurers


6.1.            ‘Combi Products’ are not allowed to be marketed through ‘Bank Referral’ arrangements.

6.2.            Insurers shall ensure that the ‘Combi Product’ is not marketed by those insurance intermediaries who are not authorised to market either of the products of either of the insurers.   


7.      Mandatory Minimum Disclosures: It is required that in a product class where two insurers are involved there shall be minimum disclosures in all the related documents viz., proposal form, policy document and sales literature. The minimum disclosures, inter alia, shall be;

    1. The product is jointly offered by abc insurance company (specify non-life insurer name) and xyz insurance company (specify life insurer name)
    2. The risks of this ‘Combi Product’ are distinct and are assumed / accepted by respective insurance companies.
    3. The liability to settle the claim benefits vests with respective insurers that is for health insurance benefits abc insurance company (specify non-life insurer name) and for life insurance benefits xyz insurance company (Specify life insurer name)
    4. The legal/quasi legal disputes, if any, shall be dealt with the respective insurers for respective benefits
    5. The policy holders of the ‘Combi Product’ under reference shall be eligible to continue with either part of the policy discontinuing the other during the policy term.
    6. Where guaranteed renewability of health insurance plan is allowed, the health insurance portion of this ‘Combi Product’ is entitled to that facility
    7. Specific Disclosures on the available premium payment options on these ‘Combi Products’.
    8. Specific Disclosures about the available Policy Servicing facilities for these ‘Combi Products’.
    9. Specific Disclosures about the proposed claims service of these policies under both the risks.
    10. Specific Disclosures on the availability of services of ‘Third Party Administrators (TPAs)’ for health insurance portion of risk, if available.
    11. Specific Disclosures on the available Grievances Redressal Options including particulars of Ombudsman under these ‘Combi products’.
    12. Policyholders are to be advised to familiarize themselves with the policy benefits and policy service structure of the ‘Combi Product’ before deciding to purchase the policy.

1.            Policy documents of ‘Combi Products’ shall contain the above referred points c, d, e, f, g, h, i and k as minimum disclosures. 2.            Declaration from the prospect shall be obtained and attached to proposal form that he / she has understood the disclosures mentioned at a, b, h and i above. 


8.      Compliance related matters: In respect of ‘Combi Products’ both the insurers shall comply with the provisions Insurance Act, 1938 and Regulations notified there under and other guidelines, circulars that are applicable to health insurance business and life insurance business respectively.


9.      For the purpose of these guidelines non-life insurance company includes standalone health insurance Company also.


10.  In order to monitor the progress of the penetration of the product class before enlarging the scope of the same all insurance companies that are marketing ‘Combi Products’ shall submit the information that is required by the Authority from time to time.


11.  The Authority may stipulate such other terms and conditions from time to time for monitoring activities of insurance companies offering ‘Combi Products’.


(J Hari Narayan)Chairman



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