Risk cover must for top-up premium in ULIPs

 

Source: BLBureau,Hyderabad, May 4

Withdrawal allowed only after 5 years, says IRDA.

All top-up premiums made during the period of contract in unit-linked insurance plans (ULIPs) should include compulsory insurance cover treating it as a single premium, according to Insurance Regulatory and Development Authority (IRDA).

In a circular to the life insurers, the Authority said 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 lumpsum 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.

The insurers should ensure conformity to these guidelines for products to be sold from July 1, 2010, IRDA said.

The authority had also reiterated that the provision of death benefits was mandatory except in cases of ULIPs linked to health insurance.

The minimum policy term for individual products should be five years while group products could be renewed annually, it added.