‘ULIPs are not investment products…’ IRDAI warns insurance companies

ULIPs are not investments: The Insurance Regulatory and Development Authority of India (IRDAI) has issued a master circular prohibiting the promotion of Unit Linked Insurance Plans (ULIPs) as 'investment products'.

According to the master circular dated June 19, unit-linked or index-linked insurance products must not be advertised as 'investment products'. Insurers are required to clearly state that market-linked insurance plans differ from traditional endowment policies and carry inherent risks.

Additionally, participating (with bonus) endowment policies must explicitly indicate that the bonuses projected in benefit illustrations are not guaranteed.

The circular mandates that all advertisements for linked insurance products and annuity products with variable annuity payout options must disclose the associated risk factors.

"All insurers shall advertise the launch of unit-linked funds or index-linked funds under existing or new insurance products only with reference to the underlying life insurance coverage and the associated products," the circular states. 

Furthermore, insurers are prohibited from issuing press releases or statements without referencing the life insurance coverage and associated products.

The IRDAI also emphasised that advertisements for all linked and annuity products with variable payouts must comply with the standards set by the Advertising Standards Council of India.

(With PTI inputs)