IRDA set to make ULIPs more transparent

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The insurance regulator is all set to make unit linked insurance premiums more transparent, reports CNBC-TV18's Payal Goel. 

 

You will soon know exactly how much of your unit linked insurance premium is being deducted, to pay for company charges, before buying a policy. Come Feburary 1, this year, all life insurance companies will have to provide detailed information regarding amounts deducted from their ULIP premiums to policyholders.

 

The IRDA has directed life insurance companies to inform the policy holder about the annual charges deducted for 10 years from the commencement of the policy. In the initial years, costs like administration charge and investment management charge can add up to anywhere between 30-70% of the ULIP premium. 

 

Till now, insurance companies only provided generic sales illustrations to their customers. The new illustrations will be specific to policy holders and will have to be signed by customers before the policy comes into force.

 

The insurance regulator feels that this move will not only help curb the rampant miss selling of these policies, but the increased transparency will also help customers make informed investment decisions.