ULIP charges restricted to 3% by IRDA

POSTED BY Jagoinvestor ON July 27, 2009 COMMENTS (75)

Does God Exist? I don’t know, but IRDA surely does!!! And hence finally it has acted as GOD to the investors πŸ™‚ . On 22nd July, IRDA capped the ULIP charges at 3%.

Let us see in this article how this will affect Investors and the implications on Investments and Insurance Sector as a whole. The decision will be effective from Oct 1 2009.


IRDA rules for ULIPS

Gross yield: This is the yield generated by the ULIP before all charges are deducted.
Net yield: This is the yield generated by the ULIP after all charges are deducted.

1. “ULIP charges” here would include allocation charge, administration charge, mortality charge and all such charges by any other name.

2. For Products whose Maturity is less than 10 years

  • “The difference between gross yield and net yield cannot exceed more than 300 basis points” (100 basis points = 1%)
  • “In this case, fund management charge cannot exceed 150 basis points”

3. For Products whose Maturity is more than 10 years

  • “The difference between gross yield and net yield cannot exceed more than 225 basis points” (100 basis points = 1%).
  • “In this case, fund management charge cannot exceed 125 basis points”

4. The IRDA has made PAN card mandatory for all policies where annual premium is more than Rs 1 lakh OR there is investment in Capital Markets. IRDA said this norm is to be implemented with immediate effect and all insurers are to comply not later than August 1.

What will be the Implications

  • ULIP products will surely see a decline in commission paid to agents. It’s very logical, IRDA is giving nightmares to Agents for some time. First it was abolistion on Entry load from mutual funds and now its capping the charges on ULIP. Agents are now going to get commissions which will be very very less compared to what they used to get earlier (like upto 35-40% in first year). It’s a bad month for Agents in India.
  • Now Agents would be really confused on whether to work hard on Selling Mutual Funds OR ULIPS as both are going to provide them almost the same kind of Commissions!
  • Miss-selling will be reduced in ULIPS as the primary motive of “High Commission” is crushed by IRDA.
  • Though ULIPs are still long term Products, I don’t recommend common man for short term investments in ULIP. Investors who think they are smarter than average investor can invest in ULIPs for short term, considering you know how to manage ULIPS well and reap the potential of switches (this mainly to churn the portfolio fast and save the short term capital gains tax). Read how to use losses to save your tax.
  • This Rule does not apply to traditional Policies, so its not a very good news for all considering Traditional Policies from LIC still dominate the Insurance Market :(.

What will happen to Existing Polices?

As per IRDA, all existing products that do not meet the requirements of this circular should be withdrawn or modified by December 31, 2009. I can only imagine the state of Agents and Insurance companies which created ULIP mess all these years. IRDA really nailed them hard this time.

Many agents which were getting fat commissions from so many months will be sad on this.

How much will this help Investors in reaping benefits from ULIPS

This is a good move from IRDA and investors will be benefited. But how much?

Earlier most of the ULIPS charged heavily in First and Second year and then reduced the charges to NIL or very very less in later years. Because of which the charges were heavily skewed in Initial Years, but the long term average charges were still in range of 3-5%.

Now after this new Rule from IRDA, almost all the ULIPS will charge for every financial year (that what i think). Hence the long term charges will now be evenly distributed over long term, but still the average charge over long term wont come down drastically!!

Read a nice article from Deepak Shenoy on “Tactics used by ULIPS to hide the charges”

Can you Invest in ULIPS now?

ULIPS for me has changed its status from “Ugly” to “Average” product after this announcement. For long term Investors, ULIPs can now serve as a good product.

Charges wise its much better in long term now ( 2.25% max) and the best thing is if you need immediate money and want to close the policy you will not be hit hard like earlier. Take the policy after Oct 1.

Some Internal Information

Just before writing this Article, I was chatting with Pradeep (name changed), an internal source who is himself an ULIP agent. See what he has to say

Guest_7FF767C0: attened a sales talk by XXX for their new ulip … XXX which guarantees highest nav for the next 10 years !!!!
Guest_7FF767C0: all ptvt. life companies are worried about mandatory PAN for annual premiums of rs one lac. and above.today smart money(black) is routed through ulip cash payments on binami names.

Guest_7FF767C0: but sir! IRDA may kindly look at the very very high incentives to the sales team(policy expences).sebi from aug 1 st declared no entry load for mutual funds so no early commissions to agents which is only 2.25% where as 40% plus in life!

So according to him, Due to the mandatory PAN for more than 1 lac premium. Lots of black money is coming through Benami Accounts now.

See The Benami Transactions (Prohibition) Act, 1988 High Net worth Clients do not want to share there investments with Govt to save tax, but because of the “mandatory PAN” rule, the money is being diverted through “Benami Accounts”. This is totally unethical and unprofessional, but this happens at the top ladder, Looks like IRDA still has some more work on this plate.


This move will help investors and it will check the mis-selling going on for last many years. It will also help in making Insurance sector more mature in India. IRDA is coming up with solutions now and Jagoinvestor sees this move as a friendly move which will help in achieving the goals of “Making each Indian an Informed Investor” Thanks IRDA.

Readers, what are your views on this Rule by IRDA, How do you think investors will take this ? And Is it helping you in any way. Please leave your Comments on this .

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75 replies on this article “ULIP charges restricted to 3% by IRDA”

  1. UdayaPoojary says:

    Hi Manish,

    I read your article which is very useful.

    However i was planning to buy SBI E wealth which is an ULIP plan and the executive said that the charges on ULIP plan is now reduced drastically and in SBI E wealth its even lesser than Mutual Fund charges.
    However my Mutual fund agent (from a well professional MF agent copany) said that
    “We would like to mention that expenses in ULIPs may range between 5-6% as against the maximum limit on expenses in mutual funds are 2.5%.Moreover mortality charges in Insurance products vary year on year whereas term plan premium is fixed.

    Also we should not mix the features insurance and mutual funds.

    We recommend a Term plan for protection purpose and other investments product (like PPF, FD, Mutual fund) for investment purposes as per your risk appetite for better risk – return generation.”

    Can you please provide your fair opinion whether it is good go with SBI E wealth or not.

    Udaya Poojary

    1. Hi UdayaPoojary

      Yes, I think your mutual fund agent is guiding you in right manner. Better dont buy that ULIP

      1. UdayaPoojary says:

        Thanks Manish for your fair and honest opinion.

  2. Rajshekhar Ghosh says:

    Hi Manish,

    I have a metlife policy smart plus, I bought this in 2007. The surrender charges for this policy is quiet high 50% of first year premium for 6th year 40% of first year premiun in 7th year and so forth. On reading your above article I realise you have said something about this.

    What will happen to Existing Polices?

    As per IRDA, all existing products that do not meet the requirements of this circular should be withdrawn or modified by December 31, 2009. I can only imagine the state of Agents and Insurance companies which created ULIP mess all these years. IRDA really nailed them hard this time. Many agents which were getting fat commissions from so many months will be sad on this.

    Does this mean they should reduce the surrender charges accordingly. If so can you help me with the relevant information that IRDA provides.

    Rajshekhar Ghosh

    1. All existing products should be changed, does not mean those which are already “ISSUED” , It only says that no plans with old model can be sold fresh , they needs to be changed, so your policy will go as per the defined rules only .

  3. sukhvinder says:

    i have policy of aviva life super saver since jan 2008.. i have pain 5 premium of Rs 20000 each. presently its surrender value is Rs 79000. also no units were alloted against the first premium. i don’t no. why units were not alloted to me. policy term is 20 years. please suggest me is there any benifit i will get in future against no unit alloted to me. please suggest what i can do. contineoue the policy or surrender it.

    1. I suspect there was high first year allocation charges when you bought it , and also may be the first year has a guaranteed return.

  4. Ashit says:

    pls give me detail of all the charges CAP. Like Highest slab of FMC, Pol Administratio, Premium allocation, Guaranteed part, and service tax and other tax in ULIP,,

    Thanks and Regards

    1. Ashit

      It depends from ULIP to ULIP .


  5. Murali Krishna says:

    I am glad that this portal is helping investors to strategize their investment options.
    I have the following question to you.
    I had taken a ULIP from Birla SUN Life called Flexi Life Line 2006- To Age 100 Pay 15 with sum assured 6,00,000(25 years).I have paid premiums for the last 4 years and now i came about the new IRDA guidelines restricting the ULIP charges to a maximum of 3% over the entire insurance term.
    After looking into my policy statement for the last 4 years, i see that i have been charged 60%, 8% and 5% for first 1, 2nd , 3rd year respectively.I also see that this 5% ULIP charges would continue for the entire term of 25 years.

    I am now in a dilemma whether to continue the policy or close the policy or stop paying premium and use the outstanding fund value(around 73,000) to continue my insurance cover.

    I even called up the agent who sold me this policy, he is asking me to continue this policy(coz it offers assured 4.5% per annum and no other policy in market offers that rate now.Also at the end of policy term, i would get 18-20 lakhs @ 10% market returns).

    Do i need to believe this guy?

    Do please advice me the best option i have?


    1. Murli

      You have been missold the policy without letting you kwno the charges , note that I am not taking if you will be in profit or loss, all i am saying is that “You could have done better” .

      Coming to your point , i think it would be better to stop it and take your money back , surrender charges might be in range of 90-95% at the moment .

      Make a fresh start in your investments


      1. Murali Krishna says:

        Dear Manish,
        I see that policy says no surrender charges after 4 policy years.

        Should i surrender and go for term insurance + Mutual funds

        Do please advice me on this?

        1. Murali

          Yes , you can do that now

  6. Utpal says:

    Dear Manish,
    I had invested in ICICI Pru Assure Wealth Plus plan in Feb’10, where I am required to pay 50k premium for minimum of 5 years. The Policy doc shows the Premium Allocation charges for first year at 100%. I am in need of funds now and want to discontinue the Policy. Do you think there is a way to get back part of the first premium of 50k now after deducting charges. Is there a IRDA rule to this effect.

    1. Utpal

      No , you are victim of misselling and all your 50k is gone as charges . You will NOT get anything . The moment you signed the documents, it was you who made it happen .

      You cant do anything now . and there are millions like you πŸ™‚


      1. Chakri says:

        Thanks a lot..your reviews and suggestions gave me a good learning.

        I have been putting my money in SBI magnum tax gain and LIC profit plus since 2007 without reading any reviews. Although I thought these for a long term of 10 years, now i feel to close down these and go for traditional insurance plans.

        I am 27 years old and thinking of taking a pension plan. My employer is already deducting some amount for pension from my Salary. Do you advice me of taking pension plan again?

        1. Chakri

          You mean Term Insurance when you say “Traditional insurance plans” . Right ?

          I dont think you should invest in pension plans at the moment, you can always buy pension plans later , better build wealth through other means like mutual funds


  7. Anupam says:

    Closing is not an option as the surrender charges will be way high ….. one option is to withdraw your money intermittently , if permitted, and move into paid-up plan. If I cancel and withdraw my policy now, i.e. after 3 years, I end up loosing close to 70% of my fund value. Right now I am assessing that what is the best course of action.

    Transferring to a new policy , that is an option that never struck me. May be even I can explore it.


    PS: had one more update and realized one more way ULIP Companies are cheating investors. Each ULIP Product is associated with several funds which you can choose, now what companies do is that they launch new funds and aggressively manage them, and lure new customers into the web. Once sufficient customers have been netted, new funds are started and old funds are allowed to wither away, thus eroding customer wealth. And the old customers do not have the option to move to new funds at their will.

  8. SJ says:

    Hi Anupam,

    Thanks for taking initiative and sharing the information.

    I’ve also have one five year old AVIVA’s ULIP with similar formula for surrender charges, I guess such products are called Acturial products which dig a hole in our pockets if we dare to surrender before maturity.
    I was also thinking of contacting IRDA about their recent guidelines and their applicability on existing policies.

    Now based on their reply I’ll also have to think whether to continue with it (till maturity) OR convert it into paid-up OR ask CC about any possibility of transferring these funds to new policy OR surrender it. I’ll consult with few before taking any action and would post their thoughts/suggestions.


    1. SJ

      thats the problem with these trapping funds . Better close it and start fresh with simple products .


  9. Anupam says:


    My faith in IRDA has been boosted as today I got a reply form them regarding the Cap on Charges and 5 year rule on surrender charges. The news is not good (as expected), as they have informed that since the contract was purchased prior to the notification, the notifications are not applicable to old existing polices.

    Only if the ULIP provider includes a new fund with fewer charges and you shift to it, then you get a little bit of benefit.

    Still a clarification is a clarification.

    Next Steps: understand the Paid up part of my policy. What are the pros and cons. What will eb my sureender value etc. If I understand correctly, on making my policy paid-up, I don’t have to pay my premium and my life insurance cover continues by way of deduction of charges from my fund. Since my policy is over 3 years old, this is an option. If anyone has exercised this option, please post your experience here. I will keep on updating the group on my experience


    1. Anupam

      thanks for the update , the best thing I can think is to close the policy , just being associated with it for insurance cover that too so small does not make sense to me .

      Take a term plan instead .


  10. vivek says:

    hi manish
    There are new ULIP policies in the market, which they claim is the lowest cost ULIP, these are ICICI Pru ACE. It has no premium allocation chargesduring the entire term of the plan. but there are three charges altogether in this policy.
    1) policy administration charges-Rs. 60/-per month through out the term of the plan.
    2) fund management charges of 1.35% in all equity oriented funds.
    3) mortality charges.
    Another poluicy is from LIC that is wealth plus.
    can you review these policies.
    i think icici ACE is worth taking it. wat do u think?

  11. vivek khadse says:

    can anyone tell me what will happen if old policies are not modified or closed.??

    1. Vivek

      If you dont continue the policy , it will become a paid up policy .


      1. Srinivas says:

        Hi Maneesh,

        I have a ULIP, max newyork life. And I still see the same administrative charges levied as before. It is not clear from IRDA circular, about Cap on charges, if existing policy holders will get the benefit atleast from Jan 1,2010. Can you please elaborate on this.


        1. Srinivas

          which charges you are talking about ? If you are talking about the 3% and 2.25% thing , then you are not understanding it well .. it only means that If the fund earns X% over long term and you get Y% in hand then X-Y cant exceed 3% .


          1. Srinivas says:

            Yes Manish, i am talking about 2.25% charges. As of now, for my policy, i see (0.42% sum assured)+(mortality charges) are deducted every month. I paid rs. 50000.00 as 1st year premium last year, sum assured being 5 Lacs(20 yrs term). Fund value was 38970.00 very first month (Feb 2009). After that they are deducting Rs 2464.00 as Administrative charges. Thats almost rs. 29568.00 for one year as charges. Present fund value is just 26775.00. I dont know how to calculate that 2.25% but I am sure I am paying huge amount as charges and the difference is quiet higher than 2.25%. I am planning to stop paying any more premiums. what do u suggest after seeing these figures?

  12. Subham says:

    Can I surrender the ULIP policy with in 1year.Is there any new rule from IRDA that before the locking period policy can be serrendered??
    Please help me on this…

  13. Anupam says:

    He He .. I did not CC him, I complained to him and CCed Insurance companys CC email and their CEO’s ID too …. πŸ™‚

    My ULIP is Aviva ….


    1. Anupam

      Nice , try CC’ing him next time, atleast put some fake id like anupam.sinha@irda.com and see if it works πŸ™‚


  14. Anupam says:

    My emails to the IRDA contact email id bounced repeatedly, so today I called up IRDA office and was suggested that I drop an email to the chairman sir. I have done that.

    Regarding getting a response form IRDA , I am very hopeful as my experience with them is that they are very responsive. I had an issue with my Car Insurance company and when they did not respond despite repeated follow-ups, I dropped an email to IRDA CCing the customer care of the company. And I got a reply email from IRDA in 2 days, and a follow-up letter from IRDA arrived yesterday πŸ™‚

    PS: my ULIPs lockin period is 10 years. I was ok with it initially as I believe that that ULIPS are long term investments, but with the pathetic performance of my ULIP, I am inclined to close the ULIP ASAP.

    Will keep the group posted on the updates.

    1. Anupam

      A little threat works sometimes , SO cc’ing to the IRDA person was of great help . Nice tactic πŸ˜‰

      Which ULIP you have ?


  15. Tanuj says:

    Hi Anupam,

    Appreciate your understanding & interprations skills. As rightly pointed out by you, even i interpret the new regulations as applicable to new policies and existing policies for any new sale. Existing policy holders have signed a contract (the policy) and IRDA is not insisting on amending the SIGNED policies. Only draft of new policies under same scheme will change.
    Since i have already invested 2.4lacs in Aviva ULIP, I still am hoping to be wrong in my interpretations. Still waiting for IRDA’s response to your mail which might just say that cost apart, surrender charge regulation will apply to all policies (existing and new) under any ULIP scheme. Hence, when i will complete 5 years of policy term next January (2011), i will be able to withdraw atleast my principal amount. (we can forget about the returns part- as on date, my 2.4 lacs have earned 5K in 4 years). I really needed this money now to finance my first home πŸ™‚
    How come IRDA is not doing anything about investors who are already caught in this KNOWN trap. If it cant help us get us a fair deal, atleast it can enforce an optional exit wherein we get our principal back with 3% interest (which they can again deduct in name of whatever charges)

    Would appreciate if you can keep us posted about IRDA’s response (i wonder if this body will respond). But i do appreciate your logical approach and patience- really πŸ™‚


    1. Tanuj

      thanks for your long comment , Didnt you knew about the 5 yrs lock in and how come you have locked in this money when you know that home payment is coming on the way . thats poor planning or am i missing anything ?

      Anupam , please follow up with IRDA and let us know the update if any .


  16. Anupam says:

    I have quoted exact circulars & paragraphs to them, and their response is: IRDA circular has target date of 1 Jan 2010 and is applicable to polices sold after that date only, so my policy has no changes in T&C.

    Again, even I am confused: I quote “The new regulation will be effected from October 1, for all products approved by the regulator after this date and all the existing products that do not meet the requirements should be withdrawn or modified by December 31.” This can mean that all products that are not compliant cannot be sold any further without any modifications to make them compliant, but nothing is mentioned anywhere about current policy holders.
    An analogy can be, on implementation of bharat stage 4 pollution norms, car companies can either make their models compatible or stop selling them, they are in no way obliged to make older models complaint to the new norms. Right.

    Now the IRDA circulars are not clear on this aspect and on the changes to be made for existing customers who are paying heavy charges.

    I have dropped an email to IRDA, regarding this and will keep everyone posted.

    Once again, I am requesting all the readers to check with tier insurance companies on the two circulars and update the group.


    PS: in the newspaper article Aviva’s CEO is quoted …

    1. manish says:


      Anyways the older policies will not get back the money they have already paid , but the rules should be applicable to old + new ones , this is my understanding. Lets see what IRDA has to say .


  17. manish says:

    The new regulation will be effected from October 1, for all products approved by the regulator after this date and all the existing products that do not meet the requirements should be withdrawn or modified by December 31.

    see :

    May be your policy complies with the rules πŸ™‚ , demand explaination


  18. Anupam says:

    Aviva CC says , new rules applicable only for new polices / products approved/sold after Jan 1, 2010 only and no changes to my ULIP policy.

    Anupam Kansal

  19. Anupam says:

    IRDA sent out a correction keeping mortality and morbidity charges out of the 2.25% cap.

    Surely, I will keep everyoen posted.

    Again, if any other company has made these changes for existing ULIP policy holders, please post your experience.

    1. manish says:

      Sure Anupam

      Thanks for your involvement .


  20. Anupam says:

    First let’s talk about Cap on Charges:
    If understand correctly Gross Yield means:
    GY%= % IRR [expected return (i.e. U1 + U2 .. Un)*NAVc – Total premium paid (P1+P2 … Pn)], where Pn is the premium paid till date, Un is the no of units purchased on paying premium Pn and NAVc is the NAV on day on which IRR is being calculated. IRR is also the % rate at which your money will grow.
    Net yield means:
    NY% = %IRR [Total no of units on Uc * NAVc — total premium paid (P1+P2 … Pn) + sum of all mortality charges + service taxes)
    As per IRDA, GY% – NY% <=2.25%
    I hold a AVIVA ULIP, (20 year policy) on which the following charges apply:
    1) Allocation rate: 96% i.e. only 96 out of Rs. 100 premium invested in units
    2) Initial Management Charge: 7% of initial units (i.e. U1) per year for 20 years
    3) Fund Management Charges: Growth Fund: 1.5% per annum (equity fund)
    4) Policy Administration Charges: Rs 45 per month (increasing 5% per year)
    5) Mortality Charges
    6) Service Charges on mortality charges
    As I understand, under IRDAs new guidelines, 5 & 6 are out of perview, and since the policy is 20 year policy, the Cap on charges (i.e. item 1, 2,3 and 4) is 2.25%. Presently, it is over 12.5%.
    Now all these charges are deducted by cancelling units (except the item 1), so in any case I feel the gap between net yield and gross yield will be more than 2.25%? What say. Let me know if I am missing anything.

    Now coming on surrender charges, my policy has 2 components:
    Surrender Charge 1= [1-1/(1.07)^N)] * no of initial units * NAVc (where N is ULIP term remaining and NAVc si the date of redemption request)
    Surrender Charge2= [1-1/(1 + x)^N)] * no of initial units * NAVc (where N is ULIP term remaining, x is 1% for a term of 4-10 years and NAVc is the date of redemption request)
    So the surrender charge in the 5th year, i.e after I have paid 5 premiums is:
    S1 = 63.76% of first years initial units
    S2= 13.86% of the net of ( total accumulated units till date – first years initial units)
    As per IRDA guidelines these charges should be ZERO …..

    Next, yes I agree, that all these charges are mentioned in the policy documents, and I should have read them, but I used to think that my relationship with my bank is of trust. What I have realized that trust is the most abused thing in this world.
    Final question on stopping the ULIP, no I am not planning to stop it right now. I was planning to stop it post 5 years due to the IRDA guideline and the heavy charges and very little returns.

    I wrote a general email to my ULIP customer care and they replied that both these IRDA notifications are for new polices only and not for existing polices. I have written back to them quoting the relevant notifications and IRDA circular numbers. Will update jagoinvestor readers on what reply I get.
    Please correct me if I have made any wrong assumptions or calculations.

    Once again thanks for all the inputs.

    1. manish says:

      I think the formula you have put for GY% is fine .. However

      You should , now NY = GY – mortality charges – other charges .
      and GY – NY <=2.25% IRDA rules apply on all the policies including existing one's . please share what they say . Its ULIP company responsibility to make sure that the gap remains 2,25% . Also in future the charges may keep changing . Manish

  21. Anupam says:

    Hi Manish,

    I discovered your site yesterday and was hooked. Very nice articles and analysis.

    Q1: Question is same as above: do the charges on existing ULIP polices also come down? I haven’t received any intimation in this regards from my company, so am planning to follow up with them.

    Q2: IRDA has removed surrender charges 5 year onwards, Is this applicable for existing polices also and has any company communicated this to its unit holders?

    Request: If any one who has an existing policy and has received any communication on the new charges and removal of surrender charges etc. please post here, so that we can put a question to our companies also.

    Request 2: Manish, the twitter etc. icons on the left cover content. if would be great if you can put them on the top of the page or on the right side.

    Thansk for all the info.


    1. manish says:


      Ans 1 : You have to understand the new rules . New rules does not say any thing about the allocation charges . It only restricts the gap between the net yeild and gross yield of the policy . So what it means is that if your policy is for 10 yrs, and your over all money makes a return of say 10% (means every penny your invested grows by 10%) . then the charges they will take should not be more than 2.25% . which means that your return should be atleast 7.75% (10-2.25%) . First year charges can still be 20% or 50% . But the return you get at the end should be just less by 2.25% of gross return .

      Ans 2 : As per the general rules , almost all the ULIP’s dont have surrender charges before the 5 yrs . There is nothing to be communicated from ULIP side , its always there in Policy documents . Company never hides anything from customers , they cant .. Its consumer reponsibility to read the documents which they dont .

      Which ULIP do you have ? Are you planning to stop it ?


  22. Jitendra says:

    Thanks for your comment,

    I am a insurance consultant and because of this IRDA move the commission struture has been hit very badly.

    and now the company is coming up with plan which does not give good insurance cover as due to mortality the IRR is going down ending making the ULIP with negligible insurance.

    Its my message to IRDA to kindly Calulate the IRR after deducting the mortality.


    1. Jitendra

      I also agree that IRR should be calculated only after deducting mortality charges as it has nothing to do with the investment part . Why dont you compain to IRDA at their site .


  23. Jitendra Bapna says:

    hello friends,

    yes! its a great move by IRDA..

    but i have a Questions. In the charges column we also have mortality charge which when compared with normal term plan will not yeild any thing, which means that a policy holder will not get anything if nothing happens to him.

    now compare it with ULIPs. if nothing happens to policy holder then it should not matter. therefore while calculating the IRR the mortality part should be set aside as the person is not liable to get anything from that.

    kindly comment as i think that the new IRR should not include the mortality as the policy holder is not liable to get that amount.


    1. yup , you are correct . but with ulips the mortality charges are cut in the same way as a term insurance ,so anyways you have to pay the cost for insurance . only the rest money should be used to calculate IRR . I guess thats how its calculated anyways πŸ™‚

    2. You thats how ulip irr is calculated, after removing the mortality charges .


  24. Purna says:

    Hi Manish

    I have taken ULIP policy on June 2009 for next 20 years. My premium is 48000 per year but they are charging 440 rupees per month. 5280 rupees per annum, but as per new IRDA policies, how much they need to charge me and also let me know how to complaint against insurer incase they dont abide by the new IRDA policie charges?
    Thanks in advance.

    1. manish says:

      440 a month is too high . Ask them the cost detail . What does that 440 cost is called as ?


  25. Manish Chauhan says:


    Why not …

    The new ulip from Aegon religare is a good one and as per IRDA guidelines

    the existing ulips have time till this year end to make changes and comply with IRDA .


  26. Anonymous says:

    dear all !1
    welcome.nothing visible from pvt. life insurance co. towards the NEW changes in charges.

  27. MONEYMANAGER says:

    hi manish, me again.
    i have a icici pension plan,
    recently,when thinking about topping it up,
    'i was told that top up attract only 1%charge,as usual,ididnt believe the agent n called up callcentre.
    they also confirmed the same,any idea?
    whats the catch?
    say for example,i wanna invest 1 lakh yearly,
    so i incur 30%charge or 30000rs first year.
    now intead of that i just take the least possible amount that is,10000/year policy, and later top it up with 90000 every year,
    this way i end up saving as much as 90%,
    well,what do you say

  28. Manish Chauhan says:

    @Shekhar I cant review it individually .. it should be same as others with some differnce .


    Its a positive move , but i dont think it will affect drastically



    What will be the impact of this ruling on the Commissions of Life Insurance Agents?
    Will this ruling give a BOOM to industry sales.

  30. Anonymous says:

    What will be the impact of this ruling on the Commissions of Life Insurance Agents?
    Will this ruling give a BOOM to industry sales.

  31. Anonymous says:


    Can you throw some light & views on the UTI ULIPS 71 an special fund Hybrid: Debt-oriented

    Multiple benefits Plan which combines the basic benefit of life insurance with returns. Tax benefits and accident insurance cover. A multiple tax-saving plan for 10 to 15 years.

    with Assured Returns:-On maturity of chosen plan a bonus of 5% and 7.5% of target amount is paid

    what make it different from other ULIPS


  32. Manish Chauhan says:


    This is not a complete information to judge if one should go for it or not .

    But as it is closing just before the IRDA rule is implemented , i sense some thing bad there and hence advise you to evaluate and go for it later.. anyways .. what is stopping you to take something later .


  33. Abhishek Aggarwal says:

    Hi manish..
    Nice info…Reliance has recently come out with a ULIP where they are charging 6% FMC for the first year and then none.
    Also, Premium Allocation charges are 1%. Plan is valid till 30th Sept.
    I am looking for a long term investment of around 20 years. Would it be advisable for me to go for this plan or wait till 1ST Oct.

  34. ulip agent says:

    dear all,
    welcome back!
    penssion or annuity ulips from life companies are not truly useful due to its TAX impact. only 1/3 rd maturity benefit is tax free rest is treated as income.

  35. Anonymous says:

    dear all,
    welcome and thanks for this service.reg. ulip re.structered charges, all pvt. life insurance co.lobbied again as usual through life insurance counsil, to remove charges from max. limit are mortality, raiders and term of the policy. ex. less charges for 20 years term more for 10 years are less. these guidelines applicable only polices issued after i st oct…
    when sebi took mutual fund industry very seriously, the counter part IRDA never shown any precautionary measures against mis selling.
    recently our freiends are inviting all mutualfunds agents into life companies!!!

  36. Bingo says:

    Nice start by IRDA, but it would have been best to transparently segregate investment part and insurance part of any policy/plan. SEBI should regulate the investment part as SEBI has the knowledge, correct mindset and experience required to regulate financial products. IRDA would inadvertently leave some loopholes for insurers to exploit.

    A good example of IRDA incompetence is this announcement itself which raised more questions than it answered. Sometimes it is best to accept one's own inability than keep repeating the mistakes. Read this for details: http://new.valueresearchonline.com/story/h2_storyview.asp?str=100611

  37. Manish Chauhan says:


    Hey thanks , i made the changes . ULIPs will still have lock in period of 3 yrs, Even if you break it in between , 3% rule still applies, but we need more clarity on this from IRDA .


  38. Anonymous says:

    I read your article and i found it interesting. There was a mistake you can correct In policy of more than 10 Years of tenure, the FMC will be 125 basis and not 225 as written in your article. Get that corrected. Throw light on what will be the effect if the client breaks the policy in between. Would there be huge surrender charges.


  39. Manish Chauhan says:

    @Yogi and @MONEYMANAGER

    All existing products that do not meet the requirements of this circular should be withdrawn or modified by December 31, 2009 , as per IRDA .


    Most of the ULIPs show you the caluclations (predictions) , So if they tell you that you pay a premium of 10k , There plan have to make sure that your 9.7k is invested for sure (in debt instruments) , for equity no one can guarantee


  40. MarketBuzz says:

    Hi Manish,

    The ulip fees now depends on the yield.

    Does that mean that every year the ulip company will calculate the returns it generated for the customer, then it will deduct lets say 3% of it?

  41. MONEYMANAGER says:

    same question as above
    existing policies ka kya??
    by the way nice blog design

  42. MONEYMANAGER says:

    same question as above
    existing policies ka kya??
    by the way nice blog design

  43. Yogi says:

    Wow, that was some news.
    At last, I dont have to convince my friend to switch to a mutual fund. I have come across people with ULIP only mindset..due to excellent marketing ways of ULIP(they refrain from accepting that ULIP is just another mutual fund with hint of insurance).
    Anyways, IRDA's move will help such people to get ULIPs but with reasonable charges.

    What happens to existing policies? Do there charges change too?


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