You may soon be able to buy index-linked life insurance policies
Most of us have heard of Ulips (or unit-linked insurance plans). There might soon be a life insurance product called Ilip (index-linked insurance product). According to a notification by the Insurance Regulatory and Development Authority of India's (IRDAI) on September 1, 2020, "The Authority is in receipt of requests from life insurers to allow them to offer index linked products. Current IRDAI, product regulations do not specifically permit insurers to sell index linked products. However, , taking into considerations requests from life insurers, it has been decided to constitute a working group to examine various aspects of Index Linked products in Life Insurance Segment."
The Working Group will be led by Dinesh Pant, Appointed Actuary of the Life Insurance Corporation (LIC) of India. At present, life insurance has two product categories — unit-linked insurance plans and traditional plans.
Here is a look at what working group formed by IRDAI to examine various aspects of the index-linked life insurance product will do:
Terms of reference of the Working Group:
What is an ILIP?
Naval Goel, Founder and CEO, PolicyX.com said, "Index-linked insurance policy (ILIP) returns will be benchmarked to an index which will allow the policyholder to get a guaranteed value. The benchmark index will be approved by IRDAI. ILIPs could also be offered as pension products and must give non-negative positive returns. "Index-linked insurance plan can be promoted as an unbundled product and cannot be sold with any other financial product," Goel said.
Source: The Economic Times