The Hindu Business Line : Actuarial-funded ULIPs to be phased out

The Insurance Regulatory and Development Authority (IRDA) has decided to phase out actuarial-funded products in the Unit Linked Insurance Product (ULIP) segment.

In a release issued here on Saturday, IRDA said though technically there was nothing wrong with the actuarial products, the objective of the move was “to remove the complexity in the unit linked products and ensure comparison across ULIPs of all companies.”

IRDA had asked companies having actuarial-funded products to withdraw them over a period of time, the release said without, however, mentioning the specific time frame.

The interests of the existing/new policy holders would be protected by the insurer and the Authority, it added.

Meanwhile, in a statement on IRDA’s decision, Mr Bert Paterson, Managing Director, Aviva India, said, “We are happy to see the clarification issued by IRDA, today, saying that there is nothing technically wrong with actuarial-funded products.”

Phase-out impact

The company did not respond when asked about the likely impact of the phasing out of actuarial fund products on its business.

Actuarial-funded products differ from the other products as the initial allocations of the sums by the insurer to the policyholder’s account in the first year would be done in the form of actuarial units which would be converted into real money later.

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