IRDA said, “The Interest payments shall be subject to a minimum guarantee of interest as applicable to savings bank account of the State Bank of India".
Under the new amendment, the IRDA has also directed Insurance companies to allow the Ulip holders to renew their policy within two years of the stoppage of premium payment. But Ulip holders shall not be allowed to renew after the expiry of lock-in period.
"The policyholder shall have the right to revive such policy within two years from the date of discontinuance and not later than the expiry of lock in period," as per the circular sent to insurers by IRDA.
However, the Ulip holders will have to bear discontinuance and fund management charges on any such stoppage, as discontinued policy fund is the segregated fund of the insurer related to all discontinued policies.
The new norms will be effective from November 1, 2011.
(Inputs from PTI)