| Irda will take the views of insurers for coming out with the norms, its chairman C S Rao said. |
| "We definitely are in favour of treating Ulips as a long-term insurance contract," Rao said. |
| Indications are that the regulator may spell out a minimum lock-in period and sum assured limits for Ulips. |
| Moreover, Irda may emphasis on the need for increasing the risk cover for top-ups (premium paid over and above the stipulated amount) in Ulips. |
| Rao also kept options open for individual insurers to follow a set of norms while selling Ulips. |
| The requirement for separate set of norms on Ulips were discussed at the recent life insurance council meeting, he said adding the norms would be finalised after insurers send their feedback by November second week. |
| Ulips have been hogging the limelight among investors, who are comparing it with mutual funds and using it as a short-term investment instrument. |
| However, insurer have time and again clarified that Ulips cannot be compared with mutual funds. "Apart from capital appreciation, Ulips offer insurance cover but mutual funds don't," an insurer said. |
| Mutual funds and insurers are at loggerheads over the actual gains from their respective schemes. |
| While mutual funds highlight the same return for annual charges ranging between 2 per cent, insurers say that over a long term period (beyond five years), Ulips have a lower average charge. |
| The competition among Ulips and mutual fund schemes also hotted up after finance minister P Chidambaram blurred the lines on tax treatment of various savings instruments. |
| From this fiscal, all savings instruments have been clubbed under section 80c for getting exemption upto Rs one lakh. |
| Both insurers and mutual funds are fast to cash in on these opportunities by advising investors to put maximum amount in their schemes. |
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