IRDAI bans advertising ULIPs as investment products
It will be necessary to make it clear in all advertisements that the bonus or past performance or return of the product / plan cannot be considered a future guarantee.
The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ban on advertising Unit Linked Insurance Plans (ULIPs) as investment products. This decision comes in response to numerous complaints received by the regulator this year regarding the mis-selling of ULIPs.
Insurance companies have been presenting new ULIPs to policyholders and investors as New Fund Offers (NFOs). In a master circular, IRDAI has mandated that all advertisements must disclose the risk factors associated with linked insurance products.
Additionally, it is now required that all advertisements clearly state that bonuses or past performance returns of the product/plan should not be considered a guarantee of future performance. For instance, if a plan delivered X% returns over the past five years, there is no guarantee it will provide the same returns in the next five years.
Insurance companies are also required to clarify that ULIPs are subject to overall performance risks. The advertisements must clearly communicate that ULIPs or index-based products do not guarantee projected bonuses and that past performance is not indicative of future bonuses.
Furthermore, IRDAI has stipulated that all advertisements for variable payout linked and annuity products must adhere to the standards set by the Advertising Standards Council of India (ASCI).
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