IRDA cautions life insurance buyers; lashes out at LIC for misleading buyers

Chennai: The Insurance Regulatory and Development Authority (IRDA) has come out strongly against the development officers and agents of Life Insurance Corporation of India for misleading the prospective policyholders.

According to IRDA, the development officers, agents of LIC are promoting Money Plus a unit-linked policy "claiming to offer astronomical returns and guaranteed benefits at the end of specific periods." Some of the leaflets assure a maturity value of Rs3.38 crore at the end of 20 years on an annual investment of Rs1 lakh over a period of three years.

Though IRDA states that agents of a few other private insurers have also made similar claims, curiously it is silent when it comes to naming them.

Nevertheless the regulator clarifies that such projections are misleading, inflated and also do not have his approval. As per the guidelines of the Life Insurance Council, the insurers are required to project their returns at a rate ranging between 6 per cent and 10 per cent only. The insurers are also expected to state that even these returns are not guaranteed.

The IRDA also warns that the returns under the unit linked products are dependent on the performance of the chosen fund, which is in turn affected by the performance of the stock markets.