Insurers get freedom to launch combo plans

The Insurance Regulatory and Development Authority of India (IRDA) has provided significant relief to insurance companies. Now, insurance companies can launch group unit-linked insurance plans (ULIPs) and combo plans (life and health insurance plans) without seeking approval from the regulator. Soon, you will be able to avail the benefits of all types of insurance in a single policy.

What are the benefits?
With this decision, there will no longer be a need to purchase separate policies for life insurance, health insurance, and investment through ULIPs. Insurance companies will now offer you the option of life insurance, health insurance, and investment in a single policy. IRDA has given approval to insurance companies to introduce combo policies. This step by IRDA will not only make it easier for insurance companies to conduct business but will also benefit customers.

What are the “File and Use” rules?
Last year, the regulator allowed insurance companies to launch health and almost all general insurance products without its approval. Previously, insurance companies had to submit the product to the regulator before launching it in the market, which caused delays in initiating the plans. However, these revised rules were applicable to individual ULIPs with existing and approved funds. Now, these rules have been extended to group ULIPs as well. Overall, under the “File and Use” framework, insurance companies can launch the product in the market first and obtain approval from the regulator later.

What do the experts say?
According to insurance experts, introducing combo policies will reduce the expenses for insurance companies. This means that the costs associated with managing policies for insurance companies will also be reduced. This decision by the regulator will benefit ordinary policyholders. Under this framework, they will have to spend less money to purchase policies.

New rules for ULIPs
The regulator has also decided to eliminate the separate fund identification number (SFIN) exit process for ULIPs. The circular states that insurance companies still need to comply with all criteria under the IRDAI (Investment) Regulations, 2016 for all funds and unit-linked insurance plans managed under the management of unit-linked policies from time to time. In addition, IRDAI has also granted permission to add new unit-linked funds to existing unit-linked products.