There has been a change in the rules related to Unified Payment Interface (UPI). Users will get a new feature from March 1, 2025. The Insurance Regulatory and Development Authority of India (IRDAI) has allowed policyholders to block the premium amount through UPI.
Insurance-ASB (Application Supported by Block Amount) facility will be launched on UPI. Through this, policyholders will be able to set aside funds for premium. IRDAI has issued a circular in this regard. The aim of this initiative is to streamline the payment process for life and health insurance policies. This feature can ensure smooth transactions without immediate debit.
How will the feature work?
Under this facility, the insurance company can offer investors a “one-time mandate” to block a certain amount in the bank via UPI. Policyholders can allow insurance companies to block funds before the insurance proposal is accepted. The money will be debited only when the insurance company approves. However, if the proposal is not accepted, the blocked amount will be returned to the customers. Please note that the money remains in the customer’s account until the insurer accepts or rejects the insurance application. During this time, this money cannot be used for any other purpose. This block remains in effect for 15 days. Despite this, interest continues to be received.
Insurance companies will give options to customers
As per the instructions of IRDAI, all insurance companies will have to provide this facility. An option will be available in the proposal form. In which policyholders can allow the insurer to block the funds in the bank account through UPI. However, this will not be mandatory. If a customer does not choose this facility, then his proposal for insurance will not be rejected.
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