In the midst of its spat with SEBI over regulating ULIPs, insurance regulator IRDA today sought to hardsell unit-linked insurance policies as an alternative to regular income or pension payouts.
"If you have not already provided for regular income/ pension during your retired life, consider Unit Linked Pension Plan," Insurance Regulatory and Development Authority said.
In a public notice issued today, IRDA highlighted various risks as also benefits associated with the ULIPs.
ULIPs -- one of the most common insurance plans sold by life insurers where the money collected from consumers is invested into equity and debt markets and returns are linked to the same -- has become a bone of contention between the two financial sector regulators, with both claiming authority to regulate these schemes.
Earlier this year, Securities and Exchange Board of India issued show-cause notices to various life insurance companies, asking why they did not seek its approval before offering the ULIP schemes, as they invest part of their corpus in capital market.
However, the insurance sector, including IRDA, objected strongly to this move, saying the SEBI Act, that requires the market regulator's approval for any investment schemes related to securities market, does not apply to insurance.
In its today's public notice, IRDA said money from consumers is invested in a fund of their choice such as equity, debt, liquid etc in a Unit Linked Pension Plan.
"At the end of the waiting period, the pension payout by the insurer commences in the form of annuity," it said.
ULIPs are saving-cum-investment products that offer a host of fund options to invest in along with the life cover.
Quiet popular with investors, they are largely sold more like an investment product with promises of great returns. Private insurance companies on an average earn almost 85 per cent of their business through sale of ULIPs.
Replying to SEBI's showcause notice issued to life insurance companies, the insurance watchdog last month said it has written a letter to the market regulator.
The insurance regulator, in its reply, is understood to have taken the stand that regulation of ULIPs by IRDA was well laid down and that it did not agree with SEBI's contention that insurers needed a certificate of registration from the market regulator for dealing in ULIPs.
In 2008-09, ULIPs accounted for 86.74 per cent of private firms' business. For the entire industry, ULIPs contributed Rs 90,645.78 crore of premiums in 2008-09 -- more than 40 per cent of total sales.
"At the end of the waiting period, the pension payout by the insurer commences in the form of annuity," it said.
ULIPs are saving-cum-investment products that offer a host of fund options to invest in along with the life cover.
Quiet popular with investors, they are largely sold more like an investment product with promises of great returns. Private insurance companies on an average earn almost 85 per cent of their business through sale of ULIPs.
Replying to SEBI's showcause notice issued to life insurance companies, the insurance watchdog last month said it has written a letter to the market regulator.
The insurance regulator, in its reply, is understood to have taken the stand that regulation of ULIPs by IRDA was well laid down and that it did not agree with SEBI's contention that insurers needed a certificate of registration from the market regulator for dealing in ULIPs.
In 2008-09, ULIPs accounted for 86.74 per cent of private firms' business. For the entire industry, ULIPs contributed Rs 90,645.78 crore of premiums in 2008-09 -- more than 40 per cent of total sales.
