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SEBI nod not needed for ULIPs: Would you invest now?

June 19, 2010

The finance ministry on Saturday said life insurers could sell unit-linked insurance plans without seeking a nod from the Securities and Exchange Board of India (SEBI).

A stockbroker uses his terminal to trade at a brokerage firm in Mumbai September 30, 2008. REUTERS/Punit Paranjpe/Files

This ends a spat between regulators over the much sought after product. Under the law, such orders issued when parliament is not in session must be confirmed by lawmakers in their next sitting.

The news would come as a relief to insurance firms and people who invest in such products.

SEBI had in April barred 14 life insurance companies from selling ULIPs without its approval. The Insurance Regulatory Development Authority (IRDA) argued SEBI had no authority to do so. After the finance ministry intervened, the two had decided to maintain the status quo.

Such products, which offer a combination of insurance and investment, were introduced in 2001 and are popular among investors who invest in them to ride the stock market and also save on taxes.

Now that there is some clarity on the issue, would you invest in unit-linked insurance plans?


Hmmm, I won’t be rushing to buy ULIPS any time soon. Mutual funds are a much better option. This is really sad news though, all those offering ULIPs will continue to fleece investors.

Posted by kneetoe | Report as abusive

This is sad news.. Advisers would continue to sell ULIPs which have extremely high charges.. Good for agents, bad for investors. They should be banned. Why not just invest in MFs which have zero entry load and have an awesome track record?

Posted by AdityaK | Report as abusive

This is really bad for a retial investor……tey will kee on lossing there money to insurance companies…..i think tme has arrived and goverment should waive off all the charges as it has happened in the mutual funds other than FMC them only IRDA will learn there lesson and investors will make money……

Posted by Saurabh0000 | Report as abusive

This is very disappointing. SEBI has to be the final regulator of ANY investment in India. IRDA and PFRDA have been, in principle, established to look after their core businesses, namely, pure insurance and pension. Any investment under the aegis of IRDA and PFRDA has to be with the regulation of SEBI. I’ll revoke my previous investments in ULIP very soon for two reasons: first, ULIPS will no longer be tax-saving instruments after the draft Direct Tax Code is enacted, and second, IRDA is not responsible enough for investments.

Posted by Shriman | Report as abusive

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