Insurance Policies Must Be Simpler And More Transparent, Says LIC Chief

Insurance companies will have to make their products simpler and more transparent as customers become better informed and more demanding, according to Life Insurance Corporation (LIC) of India managing director and chief executive officer R Doraiswamy.

Speaking at the Foundation Day event of the Insurance Institute of India, Doraiswamy said India’s growing middle class expects insurance policies to be clear, practical and useful in times of need. Customers are no longer satisfied with complicated products, difficult terms or long delays during claim settlement.

For policyholders, clarity is important. Many insurance policies come with conditions, waiting periods, limits and exclusions that may not be fully understood at the time of purchase. The problem often comes to light only when a claim is filed.

What Simpler Insurance Means For Customers

A policyholder should know what is covered, what is not covered, and how much the insurer will pay in different situations. Important restrictions should be explained before the policy is purchased and not remain hidden in lengthy documents, according to a recent report by The Times of India.

This is particularly important when a policy is sold mainly on the basis of tax benefits, returns or a low premium. A cheaper policy may not always provide the cover a customer expects.

Claim settlement will also remain an important test of whether a policy has delivered on its promise. Delays, repeated requests for documents or disputes over exclusions can add to the stress of a family already dealing with a death, illness or accident.

Insurers and agents will also have to spend more time understanding what a customer actually needs. A policy should be recommended on the basis of age, income, dependants and financial risks, rather than simply to complete a sale.

Insurance Sector Grows, But Protection Gap Remains

India’s insurance sector has grown steadily. Premium income stood at Rs 11.93 lakh crore in financial year 2024-25, while assets under management reached Rs 74.44 lakh crore. More than 41 crore policies were issued during the year.

Insurance penetration, however, remained at 3.7 per cent. This shows that a large number of households and businesses either have no insurance or do not have enough cover to deal with a major financial setback.

Doraiswamy said insurance has an important role in protecting households, supporting businesses and strengthening the economy. The next challenge for the industry is not only to sell more policies, but also to build trust and make insurance more accessible.

Faster Service Will Matter

Technology can help insurers reduce the time taken to issue policies and process claims. Online applications, digital document checks and automated systems are already being used across different stages of the insurance process.

For customers, the real benefit will be fewer forms, quicker verification and shorter waiting periods. At the same time, insurers cannot assume that every policyholder is comfortable using an app or uploading documents online. Senior citizens and customers who need assistance should continue to have access to proper offline support.

Affordability will remain another concern. Simpler products may help customers make better choices, but wider insurance coverage will also depend on whether families and small businesses can afford to keep paying the premium over the long term.

FAQs

1. What should customers check before buying an insurance policy?

They should review the coverage, exclusions, waiting periods, claim limits and payout conditions instead of choosing a policy only for its low premium or tax benefit.

2. Why is claim settlement important for policyholders?

A policy is useful only if the claim is paid on time. Delays, repeated paperwork and disputes over exclusions can increase financial stress during an emergency.

3. How can insurers make policies more customer-friendly?

Insurers can use simpler wording, explain restrictions upfront, recommend cover based on actual needs, and provide both digital and offline support.