Highest NAV Products : ULIP Policies Banned

The Indian Insurance regulator IRDA (Insurance Regulatory and Development Authority)has asked life insurers to stop selling highest NAV  (net asset value ) guaranteed products.

The Highest NAV guaranteed products are those that promise to pay the highest value the fund achieves during a certain period, say, 5 or 7 years.

IRDA,in the past 8 months, had informally expressed its discomfiture with such products by arguing that these led to systemic risks associated with the way funds were managed &  posed the risk of a heavy sell - off in equities when stock markets fell.  These products contribute about  20 % to 30% the total premium collection of life insurers.

In another move, IRDA has mandated a minimum death benefit of at least ten times the annualised premiums.

First Published 2012

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