Draft rules issued for claims payout in installments

Policyholders of personal accident and benefit-based health insurance plans soon can choose to receive claims in regular instalments or a lump sum amount or a combination of both. The IRDAI has issued draft guidelines allowing such claim settlements.

According to the draft guideline, the option of receiving claim payouts in instalments will offer an income in the hands of the claimants for a reasonable period of time

The related policies currently offer a lump sum amount to the claimant/benefactor in case of an accident (in the case of personal accident policy) or diagnosis of a critical illness such as cancer or cardiac problem (in the case of indemnity based health cover).

Unlike the regular mediclaim policy where money is paid for the specific purpose of the medical treatment or hospitalisation, in the case of these policies the policyholder can use the money as income replacement. The amounts tend to be large, INR1m ($14,580) and upwards.

The instalment option may be offered only beyond a certain threshold limit of the base sum insured, subject to the design of the product.