The Insurance Regulatory and Development Authority (IRDA) on Monday issued further modifications on guidelines related to unit linked products, while reiterating that the minimum policy term would be five years in the case of individual products and group products would continue to be on annually renewable basis.
These modifications will come into effect from July 1. In a circular to all CEO of life insurance companies, R. Kannan, Member (Actuary) IRDA, advised them that only the unit linked insurance products which conform to these revised guidelines shall be permitted to be offered for sale from July 1.
These guidelines were issued by the IRDA based on the insurance related data as on year ending March 31, 2010, and as a continuation of the ULIP guidelines “Guidelines on Unit Linked Products”, which had issued on December 21, 2005.
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All linked products including pension/annuity products must have a minimum sum assured payable on death. “All top-up premiums made during the currency of contracts must have insurance cover, treating it as single premium.”
In case of unit linked products providing health insurance cover, the provision of death benefit is not mandatory.
“No loan shall be granted under unit linked insurance products,” it stated.
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On partial withdrawals of ULIPs, IRDA stated that “Partial withdrawal is allowed only after fifth policy anniversary for all unit linked products except pension/annuity products. In the case of unit linked pension / annuity products, no partial withdrawal shall be allowed and the insurer shall convert the accumulated fund value into an annuity at maturity.”