KYC in Insurance : Importance and Features

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder

Know Your Customer, commonly known as KYC, is a process of verifying the identity and address of a customer. All financial institutions, including insurance companies, must fulfil KYC requirements to prevent fraud, money laundering, and terrorism financing. Individuals must complete their KYC before purchasing an insurance policy. Let's better understand the importance and features of KYC in insurance.

KYC Meaning

KYC is an acronym for 'Know Your Customer.' It is a process of verifying the identity and address of a customer to prevent fraud, money laundering, and terrorism financing. KYC is mandatory for all financial institutions, including insurance companies. It is a one-time process that gets completed during policy issuance.

When Is KYC Required?

KYC is required when a customer wants to purchase an insurance policy. The mandatory process helps the insurance company verify your identity and address. You must provide KYC details while filing a claim, surrendering the policy, or changing your nominee.

Importance of KYC in Insurance

KYC helps prevent fraud, money laundering, and terrorism financing. Providing KYC documents helps the insurance company verify your identity and address, ensuring the policy gets issued to the correct person. Without KYC verification, individuals can purchase policies using another person's name or details.

What Is Included in KYC Documents?

KYC documents refer to the documents that help banks and insurance companies verify your identity and address.

• Identity Proof

  The following documents enable banks and insurance companies to verify your identity:

  • PAN card
  • Aadhaar card
  • Voter's ID card
  • Passport
  • Driving license
  • Other government-issued ID

• Address Proof

  The following documents help banks and insurance companies verify your address:

  • Electricity, telephone and gas bills
  • Bank statement
  • Rent agreement
  • Other government-issued ID

• Photograph

  KYC documents include a recent passport-sized photograph.

What Are the Types of KYC?

There are two types of KYC in insurance:

• Offline KYC

  In this type of KYC, the customer has to submit physical copies of the KYC documents to the insurance company. The company will verify the documents and complete the KYC process.

• Online KYC

  In this type of KYC, the customer can complete the KYC process online by uploading the KYC documents to the insurance company's website. The company will verify the documents and complete the KYC process.

How to Do KYC in India?

You can complete your KYC online or offline in India. Let's better understand how each process works.

• Offline KYC

  • Step 1: Visit the nearest branch office of the insurance company.
  • Step 2: Fill out the KYC form provided by the company.
  • Step 3: Attach the photocopies of the KYC documents (Identity proof, Address proof, and Photograph) with the form.
  • Step 4: Submit the form and documents to the company executive.
  • Step 5: The company will verify the documents and complete the KYC process.

• Online KYC

  • Step 1: Visit the official website of the insurance company.
  • Step 2: Click on the 'Online KYC' link.
  • Step 3: Fill out the KYC form provided on the website.
  • Step 4: Upload the scanned copies of the KYC documents (Identity proof, Address proof, and Photograph) on the website.
  • Step 5: Submit the form and documents.
  • Step 6: The company will verify the documents and complete the KYC process.

KYC is an essential process in the insurance industry that helps prevent fraud and verify the policyholder's identity. You must complete the one-time KYC process when you purchase an insurance policy. Insurance companies have made the KYC process simple and convenient, with the option of online and offline modes. With KYC, insurance companies can offer a secure and reliable service to policyholders, enabling you to enjoy insurance benefits without any hassles.

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ARN - MC/05/23/2052