The capital markets regulator— Securities and Exchange Board of India (SEBI) has written to the insurance regulator- Insurance Regulatory & Development Authority (IRDA) saying that Unit Linked Insurance Plans (Ulips) are actually mutual funds and should be regulated by SEBI.
Narayan, Chairman, IRDA told Hindustan Times, “SEBI wrote to us giving an example of HDFC Standard Life’s Ulip saying that a Ulip product has a terminal benefit and therefore it is a mutual fund and therefore it should be regulated by SEBI.
“We have replied to SEBI saying apart from a terminal benefit, a Ulip also has a mortality and a morbidity cover and therefore it is an insurance product and therefore Ulips require clearance from IRDA and should be regulated by IRDA,” he said.In another case, the capital markets regulator has written to private life insurer, HDFC Standard Life Insurance asking why its pension plan called Pension Plus (which is an annuity product) does not have a life cover and whether this amounts to selling a mutual fund.
“HDFC Standard Life has replied to Sebi saying that the IRDA regulates the insurers and approves the products under the Insurance Act,” an industry official who wanted to remain anonymous said. “The definition of life insurance includes annuity which covers the longetivity of a person and such products don’t have a life cover. Annuity products are governed by the IRDA.”
Paresh Parasnis, principal officer and executive director of HDFC Standard Life refused to comment.