New Delhi, Sept. 24 -- Taking a loan with insurance cover could soon come with clearer choices for borrowers, with the Insurance Regulatory and Development Authority of India (IRDAI) proposing new safeguards around such bundled offerings.

The proposals, laid down in a consultancy paper released on Wednesday, are part of a sweeping overhaul of insurance distribution that could put pressure on insurers and distributors to reduce distribution costs and commissions.

This insurance helps in covering loan repayments in the event that the borrower is unable to make payments due to certain circumstances. These events typically include death, disability, or involuntary unemployment.

Loan protection insurance provides assurance by alleviating th...