Insurance agents of all life insurance companies selling unit linked insurance plans (Ulips) will now display rate of returns ranging between 6 and 10 per cent to customers. Last month, the Life Insurance Council, (a self-regulatory body of representatives of all life insurance companies) accorded to project returns for Ulips at a rate between 6 per cent and 10 per cent. Ulips are investment plans similar to mutual funds. The premium minus the charges (mainly expenses incurred by an insurance company) is infused in a fund of the choice of the policyholder. Ulip returns are dependent on the performance of the fund chosen, which, in turn, depends on the performance of the stock market. It is felt that agents push Ulips more simply because they get a higher commission, even up to 35 per cent in the first year against only 20 per cent for traditional products. Also, the risk in a Ulip is borne by the policyholder and not the insurance company.
Every time a customer alters the sum insured, policy term, or the riders, a fresh illustration will have to be generated from the main office and taken to the customer for signature. The policy pack that is given to the customer contains a specific illustration. Irda is also considering taking several measures to curb the wrong methods being used in selling Ulips. Irda said, that they are examining several measures to curb the mis-selling of Ulips, such as the possibility of lowering the agents commission for Ulips, the agent filing with the insurer, as part of the policy document, a list of items which he has disclosed to the customer, and the customer attesting that he has fully understood the implication of his investment decision.
Every time a customer alters the sum insured, policy term, or the riders, a fresh illustration will have to be generated from the main office and taken to the customer for signature. The policy pack that is given to the customer contains a specific illustration. Irda is also considering taking several measures to curb the wrong methods being used in selling Ulips. Irda said, that they are examining several measures to curb the mis-selling of Ulips, such as the possibility of lowering the agents commission for Ulips, the agent filing with the insurer, as part of the policy document, a list of items which he has disclosed to the customer, and the customer attesting that he has fully understood the implication of his investment decision.
