New guidelines for ULIPs

Friday 04, November, 2005 IRDA is keen on making regulations for Unit linked plans that will run parallel on endowment policies. The insurance watchdog does not want ULIPs to lose its prime focus from life insurance cover hence it has decided to tighten its norms. By next month it will issue final guidelines after receiving the comments from the industry. This step is being taken so as to avoid ULIPs from turning into pure investment products and ensure that there is enough risk cover that supplements it. IRDA intends that a certain part of the component of the investment should be extended to cover life insurance. The gains or even losses made through the investments are the main attraction for the sale of ULIPs and IRDA will make sure that the sum assured is more than five times of the premiums paid and that the policies are long term in nature. The long-term policies will help IRDA to recommend tax breaks for life insurance products. The insurance regulatory has already asked Bajaj Allianz to withdraw its Unit gain policy mainly because of its short-term features.

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