 Broadly insurance can be classified in two categories: First - Life Insurance which matures in event of death of the insured/policyholder. On occurrence of such an event the insurance company pays a sum of money assured to the nominee/beneficiary (person nominated by the policyholder). Life Insurances are of two types: Traditional Plans - which contain Endowment Plan , Cash Back Plan, Term Plan , (Term Life Insurance) and Whole life policy. And Unit-linked Insurance Plans - are of 4 types - Endowment cum Ulips, Children Plan , Retirement Plan or Pension plan and investment/saving plans. Second - General insurance. All insurance policies other than life insurance policies come under general insurance segmentation. (Also known as non-life insurance policies). These policies include Home Insurance, Auto Insurance, Travel Insurance, Marine Insurance, Theft Insurance, Office insurance and Health insurance Health insurance is most acquired policy in general insurance segment. Health insurances are of 3 types - Comprehensive Plan - which include Mediclaim and Fixed benefits plan, Accidental Insurance and Critical Care plan . |
The Insurance Regulatory & Development Authority (IRDA) is set to ease the prudential exposure limits for unit-linked insurance products (Ulip) to avoid over-regulating the segment, a top regulatory official said. Once operational, the guidelines will offer more flexibility to insurance companies in the investment of Ulip funds.
In a meeting last month, IRDA board cleared prudential norms for insurance companies selling Ulips. However, these are being reworked to make them less stringent. An Irda official familiar with the development said the board is looking to raise the cap of investment in a group company from 10% to 20%. While the limit on investment in a single company will be retained at 10%, a new 20% cap is being considered for exposure to a single industry sector.
The move is aimed at preventing over-regulating Ulips. The exposure norms will be made less stringent only for Ulips. No changes will be made for other insurance products.
Insurance companies selling products other than Ulips cannot have an exposure in excess of 10% of their corpus in a stock of a single company. The exposure in the equity of a group company and a specific industry sector is also restricted to 10% each.
Insurance officials said the stringent investment limits for Ulips could curb their growth. Already, in the case of companies with large Ulip funds such as Life Insurance Corporation, investments are rising close to some of the prudential limits.
A Ulip is a life insurance policy that provides a combination of risk cover and investment. It is similar to mutual funds with NAVs of units being declared periodically.
As per SEBI norms, a mutual fund scheme cannot hold more than 10% of its assets under management in the shares of a single company. There are also limits on how much one can invest in a promoter group company, i.e., companies that belong to the same promoter as that of the AMC.
However, unlike Ulips, there are no limits on investment in a corporate group or that pertaining to industry sector exposure.
