Regulations on linked insurance products :

These regulations are largely in line with the earlier unit-linked guidelines released by the IRDA in September 2010. They split linked insurance products into unit-linked products and variable-linked products and provide regulations for each of them separately. As with non-linked products, life insurance companies are required to ensure compliance with these regulations before 31st July 2013 for group products and before 30 September 2013 for individual products.

The key changes in these regulations as compared with the previously released unit-linked guidelines include the following:

(a) Maximum commission (or remuneration to distributors in any form) limits have been introduced in line with those now applicable under the new non-linked product regulations.

(b) Companies are now not allowed to offer the so-called ‘highest NAV guaranteed’ products and any closed ended funds. However, companies can provide guarantees at a product level (as opposed to a fund level) even at maturity.

(c) The regulations now require companies to provide comprehensive information to IRDA in respect of the guarantee charges levied on the products offering investment guarantees.

(d) Benefit illustrations are now also required to be presented using investment returns of 4% p.a and 8% p.a.

(e) There are no changes to the maximum reduction in yield to policyholder at maturity as prescribed by the IRDA in earlier guidelines. However, insurance companies are required to demonstrate compliance with these requirements using six different gross investment return assumptions at the time of filing of the product.