KYC, short for Know Your Customer, is something that we are all familiar with today. You must have encountered this term while using an app or a service for the first time. Companies across various sectors request that you complete the KYC process when you sign up for their service. KYC is especially crucial in the finance industry, helping companies verify, identify and locate their customers. KYC is mandatory for everything from mutual funds to banking and personal loan apps. But what about KYC in the life insurance industry? Is it mandatory?
The answer is yes. Life insurance firms, like Edelweiss Tokio Life Insurance, are required to follow KYC rules so they can successfully prevent unlawful activities like fraud, money laundering, and funding of terrorism. They are obligated to gather KYC information from customers and keep it up-to-date. While regularly submitting KYC documents may seem like a tedious task, it is ultimately in your best interests. Here’s what you should know about KYC when buying a life insurance plan.
What is KYC in Life Insurance?
KYC helps insurance companies verify the personal information you provide at the time of purchasing the policy. Additionally, the KYC verification takes place again at different stages of policy ownership, starting with the issuance of the policy and continuing at intervals specified by either the insurance company or the IRDAI. Keeping your information up-to-date allows the insurer to share regular updates concerning policy benefits, as well as promptly process any claims or payouts.
What are the Latest Rules Regarding KYC in Life Insurance?
If you are looking to buy a life insurance plan, KYC is mandatory. Since January 1, 2023, all new insurance policies require Know Your Customer (KYC) documents to be submitted. This new rule is in accordance with the directive of the Insurance Regulator and Development Authority of India (IRDAI). This regulation applies to different types of insurance policies, including life, health, and general insurance.
Earlier, it was optional for individuals to share their KYC documents when buying an insurance policy. However, in accordance with new rules, you are now required to submit KYC documents at the time of buying the policy. This shift in requirements now mandates the submission of KYC documents at the time of purchasing a new policy. Furthermore, you must also furnish your KYC details when making a claim, surrendering a policy, making alterations to your nominees, and during the annual verification conducted by most insurance companies.
Important Note: Existing policyholders who haven't completed their KYC need to get in touch with their insurer and provide the necessary details. Non-compliance means a customer won't be able to buy or renew their insurance policy.
The KYC Procedure in Life Insurance
According to the rules given by the Government of India, several vital documents act as 'Officially Valid Documents (or OVDs) and can be considered for identity verification. Even if you have previously given the KYC documents to an institution, they may request the documentary proof again to update the KYC database periodically.
In addition to the Application Form and initial premium, here's a list of documents an insurance company may request when applying for a policy-
- Identity Proof: Acceptable documents include PAN card, Aadhaar card, Voter's ID card, Passport, Driving license, and other government-issued IDs.
- Address Proof: You may submit your latest electricity, telephone, and gas bills for this. Other acceptable documents include bank statements, rent agreements, and other government-issued IDs.
- Photograph: A recent passport-sized photo is also required as part of the KYC documents.
Modes of KYC in Life Insurance
Here, you will find two familiar modes of KYC which are common across industries and services:
- Offline KYC: As evident by the name, you need to provide physical copies of the required documents to the insurance company in offline KYC. The insurer will then verify the documents and complete the KYC process.
- Online KYC: This method allows you to complete your KYC online. You can start the verification process by uploading scanned copies of the required KYC documents on the insurance company's website. After submitting the documents, the insurance company will review them and notify you of the verification status. You will have to resubmit the requested documents if there are any discrepancies.
KYC is For Your Benefit!
KYC is a potent weapon against fraud today, especially with identity theft and data leaks becoming common in the age of internet. You need to protect your financial information and that is why it is a welcome change that KYC is now mandatory at the time of buying life insurance. After all, it is one of the most important financial investments in your portfolio and is crucial for the financial wellbeing of your family.
Whether you do it offline or online, the KYC process plays a crucial role in providing a secure and trustworthy insurance experience. So, when your insurance company requests KYC, remember, it's for the safety of your investments and you.
Disclaimer : The above is a sponsored article and the views expressed are those of the sponsor/author and do not represent the stand and views of The Tribune editorial in any manner.
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