Investment and endowment life insurance: new requirements
The Bank of Russia introduces new minimum requirements for endowment life insurance (ELI) and investment life insurance (ILI) so as to increase the value of such products for consumers and make them more transparent and understandable for people.
ILI and ELI policies will become effective immediately after the payment of the first premium. Insurers will not be allowed to refuse to pay insurance compensations if a person is diagnosed with any disease, including socially important ones, during the effective period of the insurance contract. This will enhance risk protection for these products.
Today, a considerable number of life insurance contracts are cancelled after the end of the cooling-off period as the second premium is not paid. This means that the customer was actually not interested in the insurance policy and did not properly understand its conditions. The new requirements extend the cooling-off period for ILI and ELI policies: it will be at least six weeks for regular premium policies and 30 days for single premium policies.
Selling an insurance policy, insurers will be obliged to disclose historic returns on insurance contracts that expired over the last three years and notify customers about the amount payable in the case of materialisation of insured risks net of the insurance premium paid. Thus, consumers will be able to understand whether particular insurance products meet their expectations.
The new requirements will not be applicable to contracts with an insurance premium exceeding 1.5 million rubles. It is assumed that this exception will preserve instruments focused on qualified investors in the market.
The relevant ordinance becomes effective 90 days after its official publication.