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| Investor-friendly Ulips from tomorrow |
| Press Trust of India / New Delhi Aug 31, 2010, 20:24 IST |
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The Insurance Development and Regulatory Authority's (Irda) new guidelines protecting unit-linked insurance product (Ulips) holders from mis-selling by dealers and onerous commissions will come into effect from tomorrow and are likely to make the equity-linked instruments more investor-friendly.
As per the new Irda guidelines, the commission paid to distributors and expenses charged by insurers will no longer be front-loaded and will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.
Furthermore, Irda has fixed the floor on guaranteed returns from Ulip pension plans at 4.5 per cent, which will greatly benefit policyholders saving up for retirement.
Along with these changes, the regulator has fixed stringent minimum disclosure guidelines for insurers.
Under the new disclosure norms, agents cannot take policyholders for a ride, as they can now see the financial position of the company over the website and do not need to depend on agents, said an industry expert.
Of the 23 private life insurance companies, most have filed applications to launch two new policies each.
However, market players said none of these companies has applied for launching new Ulip pension plans on account of the floor fixed by the Irda on returns.
"We have filed for two Ulip products with the Irda. We already have approval for one and are waiting approval for another. We have not filed for any pension product as we will see how the new guideline pans out," Kotak Life Insurance COO G Murlidhar said.
Another private sector player, Bharti Axa Life Insurance, has also applied for permission to launch two new Ulip products and will analyse the market before launching a Ulip pension plan.
"We expect the Ulip business to go up as customers who were waiting for the new regulation to come in to effect will do business now. We plan to launch one product tomorrow and another product by mid-September," Bharti Axa Life Appointed Actuary Rajeev Kumar said.
In addition, DLF Pramerica Life will launch two Ulips based on the new norms in September, 2010, namely 'Ezee Wealth+' and 'Wealth+ Premier'. Of them, 'Ezee Wealth+' is awaiting regulatory approval.
"Ulips of various companies will offer similar propositions, there will be not much room for differentiation between products offered by the industry," DLF Pramerica Life Insurance MD and CEO Kapil Mehta said.
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