Insurance companies are free to introduce combo plans.
Insurance companies are free to introduce combo plans.
Insurance businesses can now introduce combo plans (life and health insurance policies) and group unit-linked insurance plans without requesting regulatory clearance. You will soon be able to combine all of your insurance policies into one and get their benefits.
The Indian Insurance Regulatory and Development Authority (IRDA) has given insurance businesses a lot of relief. The creation of group unit-linked insurance plans (ULIPs) and combo plans (life and health insurance plans) is now permitted by insurance companies without regulatory clearance. You will soon be able to combine all of your insurance policies into one and get their benefits.
What advantages are there?
As a result of this choice, it will no longer be necessary to buy separate policies for ULIP investment, health insurance, and life insurance. Now, insurance providers will give you the choice of combining your investments, health insurance, and life insurance into a single policy. Insurance providers are now able to provide combo policies thanks to IRDA clearance. Customers would gain from this move by IRDA, which will also make it simpler for insurance companies to conduct business.
What guidelines apply to “File and Use”?
Insurers were able to introduce practically all general insurance products, including health insurance, last year without the regulator’s consent. Plans were delayed in the past because insurance companies had to submit their products to the regulator before releasing them onto the market. However, individual ULIPs with approved and existing funds were still covered by these updated laws. These guidelines are now also applicable to group ULIPs. In general, insurance companies can introduce their products to the market first and seek regulatory approval subsequently under the “File and Use” approach.
What do professionals have to say?
Combination policies will save insurance firms money, according to insurance experts. Consequently, insurance firms will incur less expense in managing their policies. Ordinary policyholders will profit from the regulator’s decision. They will have to spend less money on policies under this system.
New regulations for ULIPs
The regulatory authority, IRDAI (Insurance Regulatory and Development Authority of India), has recently made a significant decision regarding ULIPs (Unit Linked Insurance Plans) and the exit procedure associated with them. ULIPs are investment-cum-insurance products that provide policyholders with both insurance coverage and the opportunity to invest in various funds.
Previously, ULIPs had a separate fund identification number (SFIN) assigned to each fund option within the policy. When policyholders wanted to switch or exit from a particular fund, they had to go through an exit procedure that involved certain formalities and documentation.
However, the recent circular issued by the regulator states that the exit procedure using SFIN for ULIPs will no longer be required. This means that policyholders will have more flexibility and convenience when it comes to managing their investments within ULIPs.
Despite the removal of the exit procedure using SFIN, insurance companies are still obligated to comply with the requirements outlined in the IRDAI (Investment) Regulations of 2016 for all funds and unit-linked insurance plans managed under unit-linked policies. These regulations provide guidelines and safeguards to protect the interests of policyholders and ensure transparent and fair management of funds.
Additionally, the circular by IRDAI has authorized insurance companies to introduce new unit-linked funds to the existing range of unit-linked products. This decision opens up possibilities for policyholders to have access to a wider selection of investment options within their ULIPs.
The move to eliminate the exit procedure for ULIPs using SFIN is aimed at simplifying the process for policyholders and reducing administrative burdens. It allows individuals to switch between funds or make partial withdrawals from their ULIPs more easily and efficiently. This flexibility can be particularly beneficial when policyholders want to realign their investment strategy or respond to changing market conditions.
Furthermore, the authorization for the addition of new unit-linked funds to existing products provides policyholders with more choices for diversifying their investments and potentially achieving better returns. It reflects the evolving investment landscape and the need for insurance companies to offer competitive and attractive investment options to policyholders.
Overall, the regulatory decision to eliminate the exit procedure for ULIPs using SFIN and allow the addition of new unit-linked funds demonstrates the regulator’s commitment to improving the flexibility and convenience of ULIPs for policyholders. It aims to enhance the investment experience and enable individuals to effectively manage and optimize their investments within these insurance-cum-investment products.
