New IRDAI Rules: Unit-linked policies Can’t Be Marketed as Investments products

Falkan Media

Falkan Media

1. Unit-Linked Plans (ULIPs) – Not Just Investments

On June 19, 2024, the IRDAI made an important announcement. They told life insurance companies that they can’t advertise unit-linked plans (ULIPs) as investment products. But what exactly are ULIPs? Well, they’re not just investments; they’re a mix of insurance and investment. Let’s break it down:

What’s a ULIP?

ULIPs are special insurance plans where part of your money goes towards life insurance coverage, and the rest is invested in the stock market or other investment options. Unlike traditional insurance policies, ULIPs have risks because they’re linked to the market.

2. Risk Factors and Bonuses

Risk Factors: Insurance companies must now clearly state that market-linked insurance plans (like ULIPs) are different from regular endowment policies. These plans come with risks because they depend on how well the stock market performs.

Bonuses: If you’ve seen benefit illustrations for participating endowment policies, you might notice bonuses. But here’s the catch: those bonuses aren’t guaranteed. They depend on various factors.

3. What Insurers Can’t Do

The IRDAI also set some rules for insurance companies. They said insurers can’t:

  • Advertise Non-Insurance Services: Insurers can’t promote things unrelated to insurance. So, no ads for random stuff!
  • Compare Rates or Discounts: When it comes to general insurance products, insurers can’t compare their rates or discounts with older prices.
  • Highlight Benefits Without Risks: If an insurance product has benefits, they must also mention the risks. No hiding!
  • Partial Disclosures: Insurers can’t tell you only the good stuff. They need to share the limitations too.
  • Exaggerate Benefits: No overhyping! Insurers can’t make their products sound better than they really are.
  • Badmouth Competitors: They can’t say bad things about other insurance companies or the whole industry.

4. Unclaimed Money

What’s Unclaimed Money? Sometimes, people don’t claim the money from their insurance policies (like when someone passes away). The IRDAI wants you to know that there’s a Bima Bharosa portal where you can find info about unclaimed amounts.

5. Linked Insurance and Annuities

What’s Linked Insurance? Linked insurance products and annuities with variable payouts are different from regular insurance. They’re connected to the stock market, so they have risks.

Investment Risks:

  • If you pay premiums for linked insurance policies or receive annuities with variable payouts, remember this:
  • Your money is invested in the stock market.
  • The value of your annuity units can go up or down based on market performance.
  • You’re responsible for your decisions.

6. Names and Quality

When you see names like “Life Insurance Company” or “Linked Insurance Contract,” don’t assume they’re amazing. They’re just names – not guarantees.

7. Zero Complaints Goal

The IRDAI wants insurance companies to use technology to handle complaints super fast. Their aim? Zero grievances!

Remember, insurance is about protecting you and your loved ones. Now you’re all set to decode those insurance ads!

Also Read: From Steel to Strength: Jindal Stainless’ ‘ज़ंग (Corrosion) Warrior’ Campaign

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