ULIPs should not be advertised as 'investment products': IRDAI

IRDAI prohibits advertising unit-linked insurance products as investments, requiring clear disclosure of risks and benefits in promotions.

The Insurance Regulatory and Development Authority of India (IRDAI) has issued a master circular barring the promotion of Unit Linked Insurance Plans (ULIPs) as 'investment products'.

Unit-linked or index-linked insurance products shall not be advertised as 'investment products', IRDAI said in a master circular dated June 19.

Insurers will have to specifically state that market-linked insurance plans are different from traditional endowment policies and carry risks.

Likewise, participating (with bonus) endowment policies will have to state upfront that the bonuses projected in benefit illustrations are not guaranteed.

All the advertisements of linked insurance products and annuity products with variable annuity payout option shall disclose the risk factors, it said.

"All insurers shall advertise the launch of unit-linked funds or index-linked funds under existing insurance products or new insurance products, only with reference to the underlying life insurance coverage and the products associated with it.

"Further, no press release or statement shall be issued by the insurer without making a reference to the life insurance coverage and the associated products," the master circular said.