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IRDA Introduced New Norms for ULIPs

The Insurance Regulatory and Development Authority (IRDA) issued circulars on 28 June 2010 outlining fresh guidelines for ULIPs. According to the new norms, the investors who wish to prematurely withdraw now have a reason to be happy as their investments would have some protection.

Oct 13, 2010 11:05 IST
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The Insurance Regulatory and Development Authority (IRDA) issued circulars on 28 June 2010 outlining fresh guidelines for ULIPs. According to the new norms, the investors who wish to prematurely withdraw now have a reason to be happy as their investments would have some protection. The IRDA capped charges from the sixth year. The charges would be applicable from 1 September 2010.
The circular specified certain clauses to be incorporated in all ULIPs to be sold from 1 September 2010. They are as follows-
•    Lock-in period for all ULIPs was changed from three years to five years, including top-up premiums and no residuary payments on policies which are lapsed, surrendered or discontinued would be made during this period.
•    Residuary payments for policies arising out of policies which are lapsed, surrendered or discontinued during the lock-in period would be paid on the expiry of the lock-in period.

•    Regular premium and limited premium ULIPs would have uniform and level paying premiums and any additional payments made would be treated as single premium for the purpose of insurance cover.

•    All limited premium ULIPs with the exception of single premium products will have a premium paying term of at least 5 years.

•    All ULIPs, other than pension and annuity products, to provide a minimum mortality cover or a health cover and the annual health cover at no time would be less than 10.5 % of the total premiums paid.

•    All ULIPs pension or annuity products would offer a minimum guaranteed return of 4.5% per annum or as specified by IRDA from time to time.