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Thursday, July 23, 2009

Ulip charges capped from Oct

From October, all new buyers of Unit Linked Insurance Plans (Ulips) will see a higher amount of their premiums flow into the fund of their choice. On Wednesday the Insurance Regulatory & Development Authority (IRDA) specified the amount of money that companies can charge on Ulip products.

The new norms, effective from October 1, is aimed at putting an end to the arbitrary charges imposed by insurance firms. The move comes close on the heels of Securities and Exchanges Board of India abolishing the distribution commissions for mutual funds.

Under the new norms announced by IRDA, for policies with a tenure of up to 10 years, the charges cannot exceed three per cent of the total returns. Moreover, insurance companies will not be able to charge more than 1.5 per cent of the total returns of a particular product as fund management costs. The industry was guarded in its response and stated the new norms would force companies to focus more on expenditure management.

source: HT

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