Order to start the facility by 1 March
The Insurance Regulatory and Development Authority of India (IRDAI) has asked the Life Insurance and Health Insurance companies to provide the facility of insurance application supported through a block amount in bank account. This is a facility in which the policyholder can ‘block’ the premium amount in his bank account and when the policy is issued, the amount is automatically deducted from the account. This is the same as the amount is ‘block’ while applying for the IPO and the amount is deducted only when the IPO is allotted. According to IRDAI norms, the premium will be paid only after informing the decision to accept the proposal given to the customer.
Facility is available through UPI OTM
The UPI (Unified Payments Interface) allows one time mandate (OTM) facility users to ‘block’ funds in their bank accounts for specific transactions. In this system, availability of money is ensured without actual payment. IRDA said for the facility of smooth transactions to pay the premium that insurance companies may use UPI-OTM and are capable for this. It said, “Under the facility of insurance application supported through ‘block’ amount in the account, money is transferred from a potential customer to the insurer only when the insurance policy is issued.” The insurance-ASBA system is allowed to be used from time to time to block premiums to the limit fixed by NPCI.
Order to start by 1 March
It said, “It is mandatory for the insurers to provide insurance-ASBA facility to their potential customers for life and health insurance policies.” Currently these facilities are being given to individual policy holders. ” It has been asked to start and provide insurance-ASBA facility. The regulator also said that insurers should partner with many banks and adopt proper arrangements and procedures. UPI-OTM service is useful in many cases. Under this, customers prefer to authorize the amount ‘block’ without immediate debit. This makes the transaction process easier. Retail investors use the facility to ‘block’ the amount through ASBA or UPI in the stock market widely.
With PTI inputs
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