Even after the Supreme Court extended the deadline to link Aadhaar with various services, including existing bank accounts, mutual funds and insurance policies, Aadhaar or Aadhaar enrolment number remains mandatory for opening a new bank account. At the same time, there are consumer complaints citing the demand for Aadhaar at points of sale of other financial products such as insurance policies and mutual funds.
The Insurance Regulatory and Development Authority of India (Irdai) has categorically clarified that Aadhaar is not required to buy an insurance policy. “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,” the insurance regulator stated in a circular.
It further clarified that for new insurance policies, the consumer is allowed 6 months from the date of commencement of account-based relationship to submit her Aadhaar number and permanent account number (PAN) or Form 60 to the insurer. “In absence of Aadhaar, (a) client shall submit any of the “Officially Valid Documents” as mentioned in the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 (as amended from time to time),” the regulator stated.
These rules state that officially valid documents include passport, driving licence, PAN card, voter identity card issued by the Election Commission of India, job card issued by Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and Aadhaar card. All of these except PAN serve the purpose of identity as well as address proof, while PAN can only be a proof of identity.
Aadhaar E-KYC for insurance
You should also take note that the Aadhaar-based electronic-know your customer (e-KYC) process is sufficient for the purpose of customer verification for insurance companies.
For life insurance products, regulatory guidelines mandate that insurers conduct a KYC check before selling the policy in case of direct sales. If the sale is through other channels, such as online, KYC is to be completed within 15 days of the sale.
These practices put the onus on insurers to ensure that these products are not used for money laundering.
For non-life insurance products like motor and health covers, the anti-money laundering guidelines of the insurance regulator mandate that the KYC process be done at the time of claim. Moreover, KYC will apply only when the claim settlement is over Rs1 lakh.
If you use Aadhaar for insurance KYC, you do not need additional documents as proof for details such as identity, date of birth or address. However, if the photograph in your Aadhaar is not clear, or there is a mismatch (for example, in photo, or name), the insurer can ask for additional documents. So, if you plan to use the Aadhaar e-KYC method, ensure that the details in your Aadhaar database are correct and updated, and that the photograph is clear.
You can verify your own Aadhaar authentication history through an option available on the Unique Identification Authority of India (UIDAI) website—www.uidai.gov.in. If you find any unauthorised authentication, you should register a complaint with UIDAI.