IRDA to increase lock-in period for Ulips

To check mis-selling, the Insurance Regulatory and Development Authority (IRDA) is planning to increase the lock-in period for unit-linked insurance plans (Ulips) from three to five years. R Kannan, IRDA member said, "This move may reduce the problem of policyholders letting covers lapse and also benefit companies as it would help them minimize their administrative and marketing costs. We are waiting for a consensus on the issue."
A senior executive at a large private sector insurance company said that the minimum tenure for a Ulip was five years at present, but partial withdrawals were allowed after three years. If the intent is to allow partial withdrawals only after five years, then it is good since insurance is a long-tenure product.
In recent months, IRDA tried to tighten regulations on Ulips. First, it put in place systems to ensure that policies were not front - loaded in terms of premium payment. Last month, it also reduced the charges levied on Ulips, though the circular was expected to be modified to factor in industry concerns.
On the current move, G N Agarwal, Chief Actuary, Future Generali said, "The move would benefit the mutual fund industry as the interest of Ulip buyers might be affected since they have to wait for five years before they could exit."

Source: http://www.siliconindia.com/shownews/IRDA_to_increase_lockin_period_for_Ulips_-nid-60336.html