Why Should You Dematerialise Your Life Insurance Policies?

Today, everything is just a click away - we've seen a remarkable shift towards digitalisation in almost every aspect of our lives. From online shopping to managing finances, the convenience of digital platforms has become an integral part of modern living. This wave of digital transformation has also swept through the insurance industry, bringing with it a host of benefits for you.
One of the most significant advancements in this journey is the dematerialisation of life insurance policies as shares being digitally available and traded in the stock market. Dematerialisation involves transforming physical policy documents into electronic format and storing them securely in a digital repository. In this article, we will dive into why dematerialising your life insurance matters, exploring its benefits and more.

What Is The Dematerialisation Of Life Insurance Policies?

In 2022, Insurance Regulatory Development Authority of India (IRDAI) introduced a new feature allowing insurance policies to be held in electronic form, similar to dematerialisation of stocks. As discussed earlier, dematerialisation is the process of converting physical policy documents into a digital/electronic format.
Once your policies undergo dematerialisation and converted into electronic format, it will be stored in a Demat account, wherein you can view policy details, make renewal premium payments, apply for claims, and perform other policy-related activities.
While dematerialisation of insurance policies had been available as an option for customers, it wasn't compulsory and was left to customers as well as insurers whether or not to provide digital policies.. However, with effect from April 1st, 2024, IRDAI has made it mandatory to ensure digital accessibility for all insurance policies, streamlining the management and accessibility of insurance documents.

Highlights Of Dematerialisation Of Life Insurance Policies

IRDAI emphasised how crucial it is for insurance companies to embrace technology. This means making it convenient for people to explore insurance options online.
It also stressed the importance of setting up systems for issuing e-insurance policies, whether customers opt for electronic platforms and/or traditional methods. This helps smooth out documentation processes and reduce paperwork, making insurance transactions easier for everyone involved.
Additionally, IRDAI has now made it mandatory to store e-insurance policies in electronic insurance accounts. This means that all insurance policies issued to you must be stored in your e-insurance account for easier management and accessibility.
This decision promotes centralisation, boosts security measures, and ensures easy access to policies, making the insurance experience more efficient and secure.

Benefits Of The Dematerialisation Of Life Insurance Policies

Here are some of the advantages of dematerialising your life insurance policies -

1️. Streamlined Policy Management
Many customers often have policies with different insurers scattered across different locations, leading to a lack of consolidated view or electronic access to their data. To manage this, they might keep a folder on their computer drive or maintain physical files, ensuring that their family is aware of these records. Alternatively, some opt to open an account on the Digilocker app and upload/store their insurance documents/policies for easy access and management.
Dematerialising your insurance policies allows you to centralise them under one roof, making it simpler for you and your family to trace the documents on priority. This also streamlines the process of managing all your policy documents, reducing the risk of misplacing or losing them.

2️. Efficient Renewals And Claims
Insurers may still request physical copies of your insurance policy for specific activities like premium payments, policy modifications, and claims processing. However, physical forms/processes will become less necessary as life insurance policies move towards dematerialisation. This transition enables you to manage policy changes online, eliminating the requirement for a physical copy for these activities.

3️. Timely Notifications
Policy dematerialisation allows for automation of renewals and other policy reminders. You can expect to receive renewal notifications and other reminders from insurance companies via email or text messages. By storing all your policies in the e-insurance account, you'll receive alerts not just from insurers but also from the Demat company. This ensures you won't miss renewal dates or other essential reminders related to your insurance policy.

4️. Simplified Data Retrieval
Dematerialisation simplifies data retrieval across insurance companies. When purchasing a life insurance policy, you're typically required to disclose details about your existing policies. Failure to inform the insurer or providing incorrect information can potentially affect your future claims.
Dematerialisation ensures that insurers have access to information about all your policies, reducing the chances of issues during a claim if you forget to inform them about existing policies. This also eliminates the need to provide the same details repeatedly while buying policies from different insurance companies.

How To Open An Insurance Demat Account?

You can open an e-insurance account by following these steps -

1. Download and complete the application form from your chosen insurance repository such as NSDL or CDSL.
2. Make sure to review the guidelines provided before filling out the application form to ensure a seamless process.
3. Include your KYC documents with the e-insurance account opening form for verification.
4. These documents typically include a recent passport-size photograph, PAN card, proof of date of birth, identity proof, address proof, etc.
5. Submit the eIA opening form along with your KYC documents to your insurer or directly to the branch of the insurance company where you hold a policy.
6. The insurance company will verify the eIA form along with the originals of your KYC documents and proceed with processing the application.
7. Once your documents are verified, your eIA can become operational within seven days of application.
8. The repository will then open your eIA and provide you with your e-insurance account number, login ID, and instructions on how to set your password. You can access your e-Insurance account using your login ID and password.

Wrapping Up!

Dematerialising your life insurance policies isn't just about embracing digital convenience - it's a way to ensure your financial well-being with ease and efficiency. By going digital, you simplify the management of your policies, making it easier to find them, renew them, and handle any claims that may arise. This shift not only cuts down on paperwork but also makes sure you stay on top of important reminders and avoid complications during claims. In essence, it's a wise and practical decision in today's digital world, giving you more control and peace of mind in your insurance journey.