KOLKATA: The next time a life insurance agent hard sells and promises you “attractive returns” on a unit-linked plan (Ulip), don’t get carried away. Use your discretion and take an informed decision on the basis of proper disclosures. That’s what the insurance industry regulator has cautioned investors.
The Insurance Regulatory and Development Authority (Irda) has come down heavily on life insurance companies, including the Life Insurance Corporation (LIC), for misleading consumers on returns on unit-linked plans.
This, the regulator feels, is being done through some development officers and insurance agents.
The regulator has taken strong exception to sales literature used for hard-selling unit-linked plans such as LIC’s Money Plus by some agents who claim that the Ulips offer astronomical returns and guaranteed benefits at the end of specific periods.
According to Irda, some of the leaflets assure a maturity value of Rs 3.38 crore at the end of 20 years on an annual investment of Rs 1 lakh over a period of three years, thereby projecting a growth of 25% per annum. Agents of a few other insurers have also made similar claims.
Taking strong exception to such false promises, Irda has said that “such projections are misleading, inflated and also do not have the approval of the insurance regulator”. A senior marketing official of LIC told DNA Money: “We believe in strong ethical business and cannot afford to tarnish our image. The top management has taken strong action against such instances (of hard-selling) and all zonal and branch level officials have been apprised of the situation”.
According to the guidelines of the Life Insurance Council, insurers are required to project their returns at a rate ranging between 6%-10% only. The insurers are also expected to state that these returns are not guaranteed.
Irda further noted that the returns under the unit-linked products are dependent on the performance of the chosen fund, which is in turn affected by the performance of the stock markets.
