Insurance benefit(sum assured ) on all ULIP mandatory:All unit linked insurance policies must provide for a minimum insurance benefit in case of death of a policy holder, insurance regulator IRDA, which is locked in a turf war over control of ULIPs with market regulator SEBI, has said. "All linked products (ULIPs) including pension/annuity products must have a minimum sum assured payable on death,"
Insurance Regulatory and Development Authority (IRDA) said in a communication to the insurance companies. The regulator, however, clarified that provision of death benefit will not be mandatory in case of unit linked products providing health insurance cover. ULIPs are insurance products with features of mutual funds.
No Loans on ULIP from any Source: It also clarified that ULIPs cannot be used to obtain loans from any sources. "No loan shall be granted under Unit Linked Insurance Products."
Minimum term of ULIP 5 years : IRDA further said that minimum policy term would be five years in the case of individual products, while the group products would continue to be renewed annually.
Partial withdrawal after 5th year only:Partial withdrawal from the policies, IRDA said, would be allowed only after fifth policy anniversary for all unit linked products except pension or annuity products. In the case of unit linked pension or annuity products, no partial withdrawal will be permitted and the insurer will be allowed to convert the accumulated fund value into an annuity only at maturity.
Top up premium Lock in period 3 years : Every top-up premium will have a lock in period of three years from the date of payment of that top-up premium, it said, adding they will not be allowed during the last three years of the contract.
All new rules effective from 01.07.2010:The revised norms, IRDA said, will come into effect from July 1, 2010.
IRDA is locked into a turf war with SEBI over control of ULIPs. The problem came to fore after the insurance regulator advised the 14 insurance companies to ignore the SEBI's order banning ULIP schemes. Both the agencies were later advised by the Finance Ministry to seek a legal binding order from a court over control of ULIPs. Meanwhile, SEBI had moved the Supreme Court to transfer all cases pertaining to ULIP issue to the apex court following which notices were sent to the Centre, IRDA and 14 insurance companies. The next date for hearing has been fixed on July 8.