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New IRDAI Regulations: KYC is mandatory for all insurance buyers

MAS Team 24 January 2023
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It was not necessary to complete  KYC in order to purchase insurance policies prior to January 1, 2023.However, new rules implemented by the Insurance Regulatory and Development Authority of India (IRDAI) have mandated that a customer must provide  KYC information to the insurer whether you they are purchasing a new policy or renewing an existing one. Health, life, and all other types of insurance policies are all covered by the rule. 
 
Although the guidelines were already published in August 2022, they became effective on January 1, 2023.Employers or human resources departments must notify their employees must submit all of you their  investment documentation by the end of January if they want to save taxes.The most practical way to reduce taxes is to purchase an insurance policy and claim the deduction under section 80C of the Income Tax Act of 1961.KYC details is an essential task to complete before submitting you investment document to  the employer
 
Know Your Customer (KYC) is a procedure for identifying a company's customer (typically banks or other financial institutions) when a digital account is opened. It is a digital procedure primarily intended to confirm the genuineness of the person..
 
It assists the insurer in determining the true identity of their clients, thereby shielding them from money-laundering schemes. Insurance companies will benefit from classifying their clients as high-risk or low-risk. which they will base their decision on whether or not to trust  their customer
 
There is various method through which KYC can be done, these are as follows:    
 
• Online Aadhaar card-based KYC
• Offline Aadhaar card-based KYC
• Video-based KYC
• Using the KYC identifier allotted by CKYCR (central KYC registry)
• KYC through PAN card
In the case of online verification a customer can complete KYC by authenticating through the video method.
Here is the list of documents required to complete KYC process for buying or renewing insurance policies. 
• Aadhaar card (registered with an email address and mobile number)
• PAN card
• Driving licence
• Passport size photograph
• Voter ID card
 
What about existing policyholders?
 
It's important to keep in mind that KYC information is not required if you are not buying a new policy or renewing it. However existing customer who is buying an insurance policy after 1st January 2023 will be required to submit the documents requested by the insurance company most probably a photo identity, address proof, and Aadhaar card details.
 
It is not a good idea to wait for the insurer’s reminder about the compliances; even if the customer didn't receive the message from their insurance provider requesting the documents, they still need to complete their KYC to prevent any mishaps. Insurance providers do communicate with their clients via SMS and email.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder