New ULIP Guidelines: Benefits and Impact

Insurance Regulatory and Development Authority of India has issued new guidelines for ULIPS. These new set of guidelines are applicable from September 1. Let us discuss about the pros and cons of these guidelines.

Mortality health Cover: It has been made mandatory to have Mortality Health Cover for all ULIPS apart from Pension and Annuity schemes..

Change in Lock in Period: This period of ULIPS has been changed from 3 to 5 years keeping it as a long horizon investment.

Loan facility has been made available to all investors so that they can stay invested without breaking it. Loan to an extent of 40% of the fund value can be obtained.

No partial withdrawal is available under new ULIPS. This enables a person to stay invested and hence protect his corpus.

A guaranteed return of 4.5% has been announced to keep investors happy.

From this time charges will be deducted in uniform manner.

Extra top up premiums have become eligible for extra life cover. Earlier top up premiums used add up yo the fund value but didn’t use to provide any extra insurance cover. From now onwards top up premiums will be eligible for insurance cover also.

Negative Impact: As insurers have rolled out so many goodies, it has come with a price. They have also increased the minimum Top Up premiums for most of their polices. However all these changes are in general good news for an investor who wants to stay invested for a long period. The new guidelines will be applicable from September 1st, 2010.

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