The Hindu : Business : Reduction of cover under ULIP allowed

Online edition of India's National Newspaper
Thursday, May 17, 2007
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Reduction of cover under ULIP allowed

Special Correspondent

CHENNAI: The Insurance Regulatory and Development Authority (IRDA) has allowed reduction in sum assured under unit-linked life insurance policies in case the customers' insurance needs are reduced

Issuing several clarifications on Wednesday on the guidelines relating to unit linked life insurance products (ULIP), the IRDA referred to suggestions that there was a need for an option to reduce the cover as the age of the insured advances. It said, that reduction in the sum assured shall be allowed "provided at least the minimum sum assured condition is maintained at all times during the contract term."

The authority said that where premiums are discontinued during the first three years, the policyholder shall be entitled to (i) death benefit equal at least to the fund value, if death occurs in the first three years; (ii) surrender value at least from the second year onwards which will become payable only at the end of three years or at the end of the revival period, whichever is later. In case of revival of ULIP contracts, all the due premiums have to be collected at the time of revival.

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