IRDAI Clamps Down on Misleading ULIP Advertisements

The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines prohibiting the promotion of Unit Linked Insurance Plans (ULIPs) as investment products. The circular mandates clear communication of the associated risks and differences from traditional policies, along with compliance with Advertising Standards Council of India regulations.

The Insurance Regulatory and Development Authority of India (IRDAI) has taken a firm stance against the misleading promotion of Unit Linked Insurance Plans (ULIPs). In a master circular issued on June 19, IRDAI declared that ULIPs should not be advertised as 'investment products'.

The circular further mandated insurers to clearly state that market-linked insurance plans differ from traditional endowment policies and involve certain risks. Additionally, any projected bonuses in participating endowment policies must be explicitly stated as not guaranteed.

Moreover, advertisements for linked insurance products and annuity products with variable annuity payout options must transparently disclose the associated risk factors. IRDAI also instructed insurers to advertise new unit-linked or index-linked funds only in relation to the underlying life insurance coverage and associated products. Compliance with the Advertising Standards Council of India's guidelines is also required for all related advertisements.

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