IRDA guidelines aim to restructure life cover design

In the face of criticism over undue delays in approval of new products, the Insurance Regulatory and Development Authority (IRDA) has announced a set of guidelines for both linked and non-linked insurance products.

All life insurers have been asked by the authority to submit their views and comments by 30 October. Some of the salient points of contained in the guidelines are as follows:

Linked plans
Linked insurance plans would be offered only under individual non-par products as unit linked insurance plans (Ulip) and variable linked plans. The discussion paper sets out the benefits, policy account value, frequency of interest accruals and other guarantees in an elaborate manner.

As per the draft, all linked insurance plans should offer a minimum death benefit that is equal to the guaranteed minimum sum assured plus the balance in the unit fund or policy account.

The draft sets out the product structure of variable linked insurance plans, where the benefits  in part or in whole are linked to the performance of an approved external index. In addition to a guaranteed interest rate it specifies a variable interest rate, which is directly linked to the performance an approved external index or an external benchmark.

The draft also provides guidelines on health Ulips.