The Insurance Regulatory and Development Authority (Irda) bans Universal Life Plans(ULPs) from 23rd October’2010.
What is a universal life plan?
Universal Life is a life insurance plan where premiums are deposited into a fund and charges for insurance and other expenses are deducted from these funds. A universal life plan addresses the twin factors of the investment risk being borne by the policyholder in the unit linked solutions and lack of transparency and flexibility in traditional products.
Irda has received several complaints on the sale practices of the insurers regarding universal life products (ULPs). After examining the complaints the Authority is satisfied that the universal life products need a better regulatory framework for protecting policyholders’ interest. The Authority has circulated draft Guidelines on Variable Insurance Products which will govern all so called Universal Life Insurance Products. Meanwhile, in order to ensure that the policyholders do not lock themselves in current Universal Life Products, it is hereby ordered that the insurers shall not sell any Universal Life Insurance policies from the close of business on 22nd October, 2010
Which companies are under the impact of this circular?
Currently only four companies – Max New York Life, Aviva Life, Bharti Axa Life and Reliance Life, offer these plans.
Life Insurers have been asked to give their comments / reaction to the draft guidelines on or before October 31, 2010. This will enable the Authority to issue final guidelines on or before November 4, 2010 and soon after the insurers can file such products for approval.
Source – irdaindia.org