Insurance Awareness - Life Insurance - LIC
Under IRDAI regulations, if a life insurance claim is not settled within the stipulated time after receiving all required documents, what is the insurer required to pay to the claimant?
Under IRDAI regulations, if a life insurance claim is not settled within the stipulated time after receiving all required documents, what is the insurer required to pay to the claimant?
medium Q5 of 15
Step-by-Step Solution
Step 1: Recall IRDAI rule on delayed claim settlement
IRDAI mandates compensation to claimants if insurers delay claim settlement beyond the prescribed time.Step 2: Identify the correct interest calculation
The insurer must pay interest at a rate not less than the prevailing bank rate plus 2% per annum for the delay period.Step 3: Eliminate incorrect statements
There is no fixed 9% rate, and insurers cannot arbitrarily decide the interest or avoid payment.Final Answer:
Interest at bank rate plus 2% per annum for the delay period → Option CQuick Check:
IRDAI penalty interest is variable and linked to bank rate.
Quick Trick: Delayed claim = Bank rate + 2%.
Common Mistakes:
MISTAKES- Memorising outdated fixed interest rates like 9% instead of bank-rate-linked penalty.
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