Fresh IRDAI Benefits For Policyholders Of Withdrawn Life Insurance Policies

An understanding of the new IRDAI provisions on withdrawn life insurance policies and how they can benefit policyholders

IRDAI Provisions

If you have purchased a life insurance product that has since been discontinued, a little anxiety on your part is normal. Fortunately for you, the Insurance Regulatory and Development Authority of India (IRDAI) regularly addresses such customer concerns. 

In its circular dated 1 September 2023, IRDAI announced that more choices and benefits will be available to policyholders of discontinued life insurance products. These benefits and choices include the option of adding riders, multiple and flexible payment options, lower interest rates, etc.

  • Withdrawing from life insurance products is a common practice among insurers

  • IRDAI introduced four provisions to protect the policyholders of such policies 

  • You can add new riders, get reduced interest rates and enjoy flexible payment frequencies 

  • IRDAI has given specific instructions to insurers on how to implement and incorporate these changes in their processes


Four Major Provisions Related To Withdrawn Products

The recent IRDAI circular is applicable for withdrawn products but has existing policies in the insurer's books. It aims to –

  • Provide additional options and benefits to the existing policyholders of these discontinued policies

  • Enhance the flexibility in the policies

  • Ensuring the protection of policyholder benefits 

In consultation with the Life Insurance Council and to uphold the above objectives, IRDAI has decided to – 

  • Add new riders to these policies and make them available to policyholders

  • Allow policyholders to change the premium payment modes or frequencies

  • Reduce the interest rate for policy revivals and loans against policies

  • Add one or more payment frequencies for the income benefits payable to policyholders

Also Read: IRDAI Puts Customers First. The Groundwork For Customer-centric Reforms

Conditions To Be Satisfied By Insurer

The insurer must ensure the following conditions while allowing the above benefits and flexibility –

  • No alterations or amendments in the withdrawn File and Use applications

  • An addendum indicating the changes made to date in chronological order will be maintained in respect of the withdrawn File and Use application in the prescribed format

  • The policyholder must be informed about the options

  • The policy document must be updated with these changes

  • These options must not adversely affect the policyholder interests

  • Extant norms must be complied with while offering the options mentioned in the circular

  • Insurers must put proper systems and processes in place so that the policyholder is adequately informed about the changes and can make an informed decision

  • The term of the rider cannot exceed the outstanding base policy term 

This circular comes into force with immediate effect.


Withdrawing a policy is a normal practice among insurers, with LIC withdrawing 12 life plans last year. You can check the list of withdrawn policies on the insurer’s website.

Policyholders of withdrawn life policies must check if these changes apply to their policy. Accordingly, they should examine the new options made available by IRDAI and exercise them if it benefits them. 

Click here for the latest articles on Insurance Basics

Also Read: Know More About The Latest IRDAI Notification That Will Affect Your Insurance Premium


Related Article

Premium Articles

Union Budget