IRDA to revise guidelines on ULIP pension plans

IRDA to revise guidelines on ULIP pension plans
After the Insurance Regulatory Authority of India (IRDA) launched new guidelines for ULIP pension plans in September 2010, the private life insurance companies, other than HDFC life, ICICI prudential had not introduced any unit linked pension products.

The reason for this is that these insurers have not been able to calculate a profitable formula to design such a product.

As per the new guidelines, the ULIP pension products have to provide a minimum guarantee of 4.5% return for unit linked pension products.

Thus, before the private insurers launch any product, they are waiting for the IRDA to revise this guideline.

Moreover, the insurers think that it is not possible to offer a guarantee of 4.5% on the ULIP pension policies as the insurance rates may fall for debt products or there may not be adequate return from equity.

Currently, IRDA is working on the guidelines and expected to release the final version within a month.

The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements.

Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto."

In 2010, the Government of India ruled that the Unit Linked Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India (SEBI).

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