ULIPs: Investment under new rules

You should not expect immediate gains from ULIPs.

Changes in ULIPs structure

There has been much discontent among the investors of ULIPs. Some of the reasons for this discontent can be attributed to investors’ ignorance and some can be to ULIPs sales people’s exaggerated claims on returns. The ULIPs fund houses have also been chided by SEBI for not maintaining transparency.

As a result, IRDA has come up with new rules for ULIPs structures. These changes are applicable since Sep, 2010. Some of the changes are:

Increase the minimum investment period: The minimum number of premium paying years and the lock in period has been increased to 5 years.

Even distribution and cap on the charges: The charges will be evenly distributed over the term of the investment. IRDA has also capped the charges on ULIPs.