There have been numerous petitions received by the Supreme Court challenging the constitutional validity of Aadhaar. The world’s largest biometric identification database has been mired in privacy concerns, amid fear that data of millions of Indians may be compromised.
All these concerns have led the Supreme Court to come out with an order that extends, indefinitely, the deadline for linking Aadhaar with various services such as existing bank accounts and health insurance policy.
Why is KYC done when buying an insurance policy?
Know Your Customer (KYC) is a mandatory process in financial transactions, including insurance. It ensures transparency, prevents fraud and verifies the identity of policyholders.
Key Reasons for KYC in Insurance:
- Prevents identity theft and fraudulent claims.
- Complies with government regulations.
- Ensures that the benefits of insurance reach the rightful policyholder.
- Helps insurers assess risk and issue appropriate policies.
When purchasing a health insurance policy, KYC documents such as a PAN card, voter ID, passport or Aadhaar may be required for verification.
Why was Aadhaar linked to insurance policies earlier?
In 2017, the government made it mandatory to link Aadhaar with financial services, including insurance policies. The primary reasons for this move were:
- To streamline the identification process and eliminate duplicate or fake policies.
- To curb money laundering and fraudulent claims.
- To improve efficiency in claims settlement and reduce paperwork.
However, the Supreme Court later ruled that Aadhaar linking cannot be mandatory for services other than government subsidies. As a result, its requirement in insurance policies was reconsidered.
Is Aadhaar mandatory for existing insurance policies?
Making its stance clear, the insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) has said that Aadhaar is not required to buy an insurance policy. It released a circular that stated, “In view of the order of the Hon’ble Supreme Court of India for existing insurance policies, the date of linking Aadhaar is extended till the matter is finally heard and the judgment is pronounced by Hon’ble Supreme Court of India”.
Further to this, IRDAI said that customers buying new insurance plans will be given 6 months from the date of the policy to submit their Aadhaar number, failing which, they will need to submit any “officially valid documents” as mentioned in the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
The “officially valid documents” consist of driving license, passport, PAN card, and voter identity card among others. All of these documents, except the PAN card, can serve both as photo and address proof.
How to link Aadhaar with insurance policies - online and offline
While Aadhaar linking is optional, some policyholders may prefer to use it for convenience. Here’s how you can link Aadhaar to your insurance policy.
Online Process:
- Visit the insurer’s website and log in to your account.
- Go to the Aadhaar linking section in the customer portal.
- Enter your Aadhaar number and verify it with an OTP sent to your registered mobile number.
- Submit the request and wait for confirmation from the insurer.
Offline Process:
- Visit the nearest branch of your insurance provider.
- Fill out the Aadhaar linking form and provide a self-attested copy of your Aadhaar card.
- Submit the form along with other KYC documents.
- Receive confirmation after verification.
Conclusion
Aadhaar is no longer mandatory for insurance policies, including a health insurance policy or any other form of coverage. However, it remains a valid and widely accepted KYC document. Policyholders have the choice to link their Aadhaar voluntarily for ease of transactions. Whether it is for your individual health insurance or health insurance policy for family, keeping updated with regulatory changes and ensuring compliance with KYC norms will help you maintain a seamless insurance experience.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis or treatment. Please consult a certified medical and/or nutrition professional for any questions. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.