Recently with SEBI comments, Insurance regulator IRDA came up with new measures on ULIPs which provide more benefits to the customers compared to previous measures. Some of these measures are
- Extending the minimum term of policy to five years from three years.
- Proposal of fixing the maximum limits of surrender charges
- Capping the first year surrender charge at 15 per cent for a policy over 10 years. This surrender charge would continue declining and go away in the sixth year. So far, insurance companies had been charging as much as 60%.
- Compulsory annuitisation in pension policies.
- Partial withdrawal from the policies would be allowed only after the fifth policy anniversary for all unit linked products, except pension or annuity products.
The industry experts are believing that these revised norms might be helpful for Insurance companies as well as for policy holders. These revised norms will come into effect from 1st July 2010.