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.