Insurance regulator IRDAI has prohibited insurers from advertising Unit Linked Insurance Plans (ULIPs) as investment products.
The Insurance Regulatory and Development Authority of India (IRDAI), in its latest circular, mentioned that Unit-linked or index-linked insurance products shall not be advertised as “investment products”.
“An advertisement on the unit-linked insurance product, index-linked product, and annuity products with variable annuity pay-out option shall contain adequate, accurate, explicit and updated information, in simple language,” IRDAI said.
The insurance companies will have to specifically mention that market-linked insurance plans are different from traditional endowment policies and carry risks. In the case of bonus endowment policies, the firms will have to state that bonuses projected in benefit illustrations are not guaranteed.
The IRDAI said that the onus is also on the advertisement committee of the company and senior-level officer of the distribution channel to analyse, examine and approve the advertisements and ensure that they are not misleading.
Further, insurers can outsource permitted activities only if they are economical and efficient in providing services to the customers or enhancing the value of their business, the IRDAI said.
The regulator added that the policyholders can access information on unclaimed amounts with any insurer on the Bima Bharosa portal. It also directed the firms to build a tech-based robust mechanism for grievance redressal of policyholders.
“Insurers are required to establish regular customer interface through the consumer-friendly process, running awareness campaign; facilitate submission of grievances online and ensure registration of all grievances; strengthen resolution process with internal escalation matrix and Internal Ombudsman Schemes,” IRDAI mentioned.