ULIPs Now Dearer to Buyers


Insurance Regulator, IRDA recently directed life insurers to offer the unit-linked insurance plans (ULIPs) at a low cost along with the higher life coverage and with a longer lock-in period to buyers. According to the industry players, except the customers, it is a bad news for insurance agents and life insurance companies.

Interestingly, this new rule benefitting the customers came within a few months of stock market regulator SEBI made statements that the ULIPs were investment products and it banned 14 life insurers from selling ULIPs.

According to the new IRDA plan, 4% on annual premium should be charged by the insurers on ULIPs for the first five years and then after the charges should be reduced during the tenure of the policy. 2.25% of the yearly premiums will be restricted for the plans of 15 years and above. Ulips will become more attractive to the customers because of the decrement in the charges for the same amount of premium which they had paid earlier.

Lock-in period has also been increased for all Ulips from three years to five years. The products according to the decision will be changed into long term financial instruments which safeguard from the risk protection.

Source: TOI


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