The policies filed after October 1, 2009, would be governed by the new rules
Life Insurance Corporation (LIC) of India is looking at measures like increasing the minimum premium and lock-in period, and rearranging other expenses such as fund management charges for unit-linked insurance plans (Ulips) after the Insurance Regulatory Development Authority’s (IRDA’s) cap on insurance charges.
T S Vijayan, chairman of LIC, said: We saw that two-three products need to be restructured. We will redesign the products by cutting expenses such as fund management. We will not touch our agents’ commission. In some cases, the minimum single premium will have to be increased from INR25,000 to INR31,000 or INR40,000, or we may have to increase the minimum term from five to 10 years.”
IRDA had recently prescribed the caps on the overall charges that life insurance companies can levy on subscribers of their Ulips. It had capped the difference between gross and net yield to customers at 3% for 10-year policies and at 2.25% for policies of over 10 years.
The regulator had said that the insurers could withdraw all existing policies that did not meet the requirement by December 31, 2009 while all policies filed after October 1, 2009, would be governed by the new rules.