Chennai, Oct 21 (IANS) In yet another policy holder-friendly move, the Insurance Regulatory and Development Authority (IRDA) Thursday banned the sale of universal life products from Oct 22, 2010.
The universal life product is a mix of unit linked insurance and traditional policies. Unlike unit linked insurance policy (ULIP) the fund value is not declared.
In an order issued Thursday under Section 14 (2) (B) of the IRDA Act, the regulator has said: ‘The Authority has received several complaints on the sale practices of the insurers regarding universal life products. After examining the complaints the Authority is satisfied that the universal life products need a better regulatory framework for protecting policyholders’ interest.’
Citing the draft guidelines on Variable Insurance Products issued by it Thursday, the IRDA said that the guidelines ‘…will govern all so called Universal Life Insurance Products. Meanwhile, in order to ensure that the policy holders do not lock themselves in current Universal Life Products, it is hereby ordered that the insurers shall not sell any Universal Life Insurance policies from the close of business on 22nd October, 2010.’
The regulator’s move will affect life insurers like Max New York Life, Aviva Life, Reliance Life and Bharti Axa Life.
Industry officials told IANS that insurers have been passing on high commissions to distributors under universal life products and it needs to be regulated.