Irdai bans ads hawking Ulips as pure investment products

Unit-linked insurance plans are hybrid products which allow investors to create wealth over long term as well as have an insurance cover

- BENN KOCHUVEEDAN

FINALLY, mis-selling of financial products, mostly life insurance products led by unit-linked insurance policies or Ulips, which lead the mis-selling bandwagon ever since the industry was born, may ebb, forget ending it as such, with the regulator Irdai over the weekend ordering life insurers to nearly end advertising Ulips, one of the biggest asset classes in the stock markets as investment products.

In fact, one of the primary goals of the Insurance Regulatory and Development Authority (Irdai) ever since its establishment in 1999, has been to stop the mis-selling of Ulip, which is a combination of an insurance policy and an investment product. In fact, if compared, the incidences of misspelling of Ulips/life insurance policies and mutual funds, the latter is a pale shadow of the former with the number of complaints against Ulips misselling being almost 99.9:01. The next in line are credit card issuers and banks.

The regulatory crackdown comes after it has been repeatedly found that insurers have been hawking Ulips as a pure investment product and are coming out with misleading advertisements to vouch for this. The regulator, while prohibiting insurers from advertising Ulips as investment products, said these are hybrid financial products that combine insurance and investment.