Insurance companies will not be able to sell ULIP as an investment, IRDA's strictness; will have to give information about risks
Investment: The Insurance Regulatory and Development Authority of India (IRDAI) has become strict on calling Unit Linked Insurance Plan (ULIP) an investment. IRDA has now banned the sale of ULIP by calling it an investment product.
The Insurance Regulatory and Development Authority of India (IRDAI) prohibits the promotion of Unit Linked Insurance Plans (ULIPs) as an investment product. This means that insurers will no longer be able to promote ULIPs as investment products. The insurance regulator stated in a master circular dated June 19 that 'unit-linked' or 'index-linked' insurance products will not be offered as investment products. Companies will have to clearly declare that market-linked insurance plans differ from standard endowment policies and carry risks. IRDA stated that risk considerations must be disclosed in all ads for linked insurance and annuity products with variable annual payment possibilities.
IRDA said in a circular that all advertisements must mention that the product's bonus or past performance cannot be considered a guarantee for the future. That is, if a plan has given a 25 percent return in the last five years, then the companies will not be able to claim that it will give a 25 percent return in the next five years as well.
The circular states that all insurance companies will mention life coverage and related products in the advertisement of unit-linked funds or index-linked funds under existing or new insurance products. Without this, no press release or statement will be issued by the companies. ULIPs are such products in which investment is made in the stock market. Also, insurance coverage is available on the basis of the plan.
