Circular No. IRDA/ACTL/CIR/ULIP/071/05/2010, dated 3-5-2010
Based upon the insurance related data as of year ending March 31, 2010 and related discussions, the Authority issues the following clarifications in continuation of the ULIP guidelines “Guidelines on Unit Linked Products” issued vide Circular No. 032/IRDA/Actl/Dec-2005 dated 21.12.2005:
A. The following provisions of the said Guidelines are reiterated:
1. Minimum policy term: The minimum policy term shall be five years in the case of individual products and group products shall continue to be on annually renewable basis.
2. Guarantees on policy benefits: All linked products including pension / annuity products must have a minimum sum assured payable on death, as per the Circular mentioned under Para 7.3 below. In case of unit linked products providing health insurance cover, the provision of death benefit is not mandatory.
3. Loans: No loan shall be granted under Unit Linked Insurance Products.
B. In further clarification on partial withdrawals, the paras 7.3, 8.1, 8.2 and 8.3 of the said ULIP guidelines of December 2005, shall be substituted / modified.
7.3 All top-up premiums made during the currency of contracts must have insurance cover, treating it as single premium, as per Circular No: 061/IRDA/Actl/March 2008 dated March 12, 2008.
8.1 Partial withdrawal is allowed only after fifth policy anniversary for all unit linked products except pension / annuity products. In the case of unit linked pension / annuity products, no partial withdrawal shall be allowed and the insurer shall convert the accumulated fund value into an annuity at maturity. However the insured will have the option to commute up to a maximum of one-third of the accumulated value as lump sum at the time of maturity. . In the case of surrender, only up to a maximum of one-third of the surrender value could be availed in lump sum and the remaining amount must be used to purchase an annuity.
8.2 The last sentence “the provisions in this para shall not apply in respect of pension / annuity business” stands deleted.
8.3 Every top up premium shall have a lock in period of three years from the date of payment of that top up premium. However, top ups are not allowed during the last three years of the contract.
All other terms and conditions of the above said Circular and clarifications will continue in force.
The above modifications will come into effect from 1st July 2010.
All life insurers are advised that only the Unit Linked Insurance Products which conform to these revised guidelines shall be permitted to be offered for sale from 1st July 2010.
