New IRDAI Regulations: KYC is mandatory for all insurance buyers; check details

Before the 1st of January 2023, it was not mandatory to get your KYC done for buying insurance policies. But as per new regulations implemented by the Insurance Regulatory and Development Authority of India (IRDAI) have made it essential to submit your KYC details to your insurer in the case of whether you are buying a new policy or renewing one. The rule is applicable to all types of policies, including health, life, or general insurance.
The guidelines were already issued in August 2022 but came into force from the 1st of January 2023. You must be planning to save taxes and employers or HRs must be giving you the notice of submitting all your investment documents before January ends. Buying an insurance policy to avail of the deduction under section 80C of the income tax act 1961 is the most practical way of saving tax. Getting benefits of the same KYC details is an essential task to complete before submitting your investment document to your employer.

What is KYC?

First thing first, before jumping off to the details of getting it done, let’s understand what KYC is? Know Your Customer (KYC) is a process of identifying the customer (you, in the current case) of a company (mainly banks or financial institutions) at the time of opening a digital account. It is a digital process primarily designed to authenticate your genuineness, you are the person who claims to be.

Why does IRDA make it compulsory?

It helps the insurer to recognise the real identity of their customers which protects the insurers from money laundering activities. It will also help insurance companies to divide their customers into the category of high-risk to low-risk. On the basis of which they will decide whether to trust you (customers) with their services or not.

Ways through which KYC for insurance can be done

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

You can complete your KYC by authenticating yourself through the video method, in the case of online verification.

Documents you require for KYC

Here is the list of documents you will require to complete your KYC process for buying or renewing your insurance policies. Be ready with these documents:
  • Aadhaar card (registered with an email address and mobile number)
  • PAN card
  • Driving licence
  • Passport size photograph
  • Voter ID card

What about existing policyholders?

You need to remember that if buying a new policy or renewing it, either of them is not the case, then you do not need to submit KYC details mandatorily. However, if you are an existing customer of the insurance company, but your policy is due after the 1st of January 2023, then you need to submit the documents requested by the company, commonly, a photo identity, address proof, and Aadhaar card details.

Waiting for your insurer to remind you about the compliances is not a good idea, even if you didn’t get the message from your insurance company requesting the documents, you must complete your KYC to avoid any casualties. However, insurance companies are in touch with their customers via SMS and email.