Thursday, 25 November 2010

New IRDA Direction for Variable Insurance Products

Insurance Regulatory and Development Authority (IRDA) directs that all universal life products, which are recently entered in India and gives greater flexibility to customers will not have any unit linked component in those products. IRDA instructed that all such products are called Variable Insurance Products (VIPs) and have a lock in period of at least three years.

IRDA also instructed that all such Variable Insurance Products should provide death benefits equals to guarantee sum assured plus the balance in the policy account while the maturity benefit should equal to the balance in the policy account and terminal bonus, if any. The sum assured for these policies should be at least 10 times of the annual premium.

Single premium or limited premium offers are not allowed for these VIPs and the cost must not be more than 27.5% of the first premium (including commission and other expenses)  and 7.5% for the second and third year premium and after that it must be within 5% and the minimum policy and premium payment term should be 5 years.


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