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Premia For Small Ulips Likely To Rise 30%

As companies seek to keep agency commissions intact

The modified unit-linked plans (Ulips) without multiple fund management charges, seems to be beneficial for customers but the gains for those seeking smaller-ticket policies may be limited.

The premiums for such policies could rise by 25-30% as companies seek to keep agency commissions intact.

Insurance Regulatory and Development Authority (IRDA) had capped the difference between gross and net yield to customers at 300 basis points for 10-year policies and at 225 basis points for policies of over 10 years. It had also capped fund management charges at 150 basis points for policies with a period of less than 10 years and 125 basis points for above 10 years.

Life Insurance Corporation of India (LIC) has asked its actuaries to restructure some Ulips.

T S Vijayan, chairman of LIC, said: We may have to raise the minimum premium from Rs 25,000 to Rs 40,000 and also increase the lock-in period from five years to 10 years to keep agency commissions intact.