caalley logo

The alley for Indian Chartered Accountants

IRDAI bars unit-linked policies from being advertised as investment product

New Delhi, Jun 21, 2024 

All advertisements of linked insurance products and annuity products with variable annuity pay-out option must disclose risk factors, says regulator

On June 19, the insurance regulator issued a ‘master circular’ outlining guidelines that aim to empower policyholders. The Insurance Regulatory and Development Authority (IRDAI) barred insurers from advertising unit-linked and/or index-linked products as ‘investment products’.

It asked insurers to form an advertisement committee, approved by their boards, or appoint a senior officer from the distribution channels to review and approve advertisements, ensuring they are truthful and not misleading.

IRDAI asked insurers to develop a “robust, technology-based mechanism” for addressing policyholder grievances.

Master circulation said there shall be no advertisements:

On services not related to insurance

On comparison of rates/ discounts to erstwhile tariff, in case of a general insurance product

Highlighting the potential benefits of an insurance product without a fair indication of associated risks, if any

Disclosing benefits partially without corresponding limitations/ conditions/ implications, Exaggerating the benefits of the product,

Denigrating the reputation of a competitor or the industry.

IRDAI said advertisements for unit-linked insurance products, index-linked products, and annuity products with variable annuity payout options must include adequate, accurate, explicit, and up-to-date information in simple language.

Unit-linked and/or index-linked products must not be advertised as "investment products".

All advertisements for linked insurance and annuity products with variable annuity payout options must disclose the associated risks and include the warning statements.

About advertisements in hoardings, posters and in audio visual media, IRDAI asked for the following: Companies must say linked insurance products/ annuity products with variable annuity pay-out options are different from the traditional insurance products and are subject to the risk factors.

The master circular says that all insurance advertisements must disclose:

“The risk factors associated with the bonuses projected under the product are not guaranteed”

Past performance does not indicate future bonuses

Products depend on the insurer's overall performance in terms of investments, expense management, mortality, and lapses.

Additionally, insurers are required to advertise the launch of unit-linked funds or index-linked funds under existing or new insurance products only with reference to the underlying life insurance coverage and the associated products.

"No press release or statement shall be issued by the insurer without referencing the life insurance coverage and the associated products," says the circular.

[The Business Standard]

Read more on:
Don't miss an update!
Subscribe to our newsletter