IRDA increases lock-in period for ULIPs to 5 yrs

by $hakti $ingh Dul@wat on June 29, 2010

The much anticipated guide and instructions regarding lock-in period for Unit Linked Insurance Plans or ULIPs has finally emerged through the decision of IRDA or the Insurance Regulatory and Development Authority.  From the previous three years period, IRDA deemed it appropriate to increase ULIPs lock-in duration up to five years.  This decision finally stopped the disagreement between SEBI’s market regulators and IRDA itself.

The said decision above formalizes the lock-in period for ULIPs to increase to more years from their current 3 years period, making it to 5 years.  This change has to take effect and must be followed from now on since IRDA would like to assure that ULIPs will now be treated not anymore as short term products but as long term policy insurance product.  Except for the pension product, all the rest of the ULIPs will be categorized as yearly or annuity products.  Meaning to say ULIPs now will have a health cover or a mortality cover as a consequence.

If in case there will be an amount to be paid by the policy holder which is considered as any top in the insurance policy, then this top will definitely be regarded as one single premium. This simply means that all top up that the policy holder makes will incur an added insurance cover that will back up the said insurance premium itself.

Moreover, no withdrawals will be allowed when it comes to the pension and annual product.  ULIPs would like to remind its policy holder that those pension annuity products may not necessarily have a life or health cover.  But, these types of insurances must be upgraded or turned into annuity on its maturation.

ULIPs pension annuity offers will have 4.5% yearly minimum rate of investment or will be dependent in view of the suggestion or the regulator.  Regarding ULIPs loans, there will be 40% of the NAV that the policyholders can take as their net loan.  It must however be noted that it should be in the form of an equity oriented ULIP so that it will give the client an equity as high as 60%.

In view of the ULIPs’ charges,the policy holder should be aware foremost in view of some standard and legal charges which include the following: guarantee maturity charge, highest NAV guarantee charge, surrender charges and fund switch charge.  Other insurance companies may even include hidden charges to their plan holders.

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In conclusion, this new guide and instructions will take effect starting September 1st, 2010 in order to give the rest of the companies more than enough time to comply with them.

{ 8 comments… read them below or add one }

marvin fernandez June 29, 2010 at 4:13 pm

this article is great! i just wanna ask if ever i get an ULIP insurance, what steps shall i go?isn't it difficult to apply for one?pls help…thanks for this informative post…more power to you!


ssdulawat June 29, 2010 at 4:19 pm

First of all invest in ULIP if you can hold your amount for long term, there are some plan available in the market they called health + wealth plan.
Those plan provide you health insurance with wealth plan advantage , Please take a look our ULIP series in details

Shakti Singh Dulawat


marvin fernandez June 29, 2010 at 4:28 pm

what if i dont want to avail of the health insurance just the plan itself? could it be fine?


Uysonaa June 29, 2010 at 4:31 pm

thank you so much for your advise mr dulawat…


ssdulawat June 29, 2010 at 4:34 pm

welcome Uysonaa

ssdulawat June 29, 2010 at 4:32 pm

Well Today health insurance is required , its more important than money saving , because if you don't have health you can not do any thing . Health is first wealth.
IN INDIA LIC, Reliacne, TATA provide some best ULIP policies.


ramon gasgas jr June 29, 2010 at 4:17 pm

reading this article made me understand better the importance and benefits of having a secured future. i hope you'll post more on how to become a better person financially!!!kudos to your blog!Bravo they're very informative and easy to read! you're such a good writer mr dulawat!!!keep goin…suggestion…can you also have light articles for young people, foreigners like us living as immigrants in india? Ilove your blog!


ssdulawat June 29, 2010 at 4:28 pm

Thanks we will take care of your suggestion and publish some helpful article in this series. Please take a look our ULIP series in details



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