Ulip customers to sign certificate of approval

DNA Money

Customers will have to sign a "certificate" stating approval and satisfaction while buying a unit-linked insurance plan (Ulip) for the first time.

The Insurance Regulatory and Development Authority (IRDA), as part of its drive to prevent 'mis-selling', is in the process of asking companies to prepare a one-page document with each and every Ulip, which is being sold to the insured.

This comes as a major move by IRDA, after having clamped down on specific actuarially funded products of a couple of companies.

The insurance regulator plans to keep on "discovering" the various discrepancies which may arise and cause discomfort to customers.

"We want to facilitate some kind of understanding to customers and, hence, have thought of asking the customer to sign a certificate which should state that he or she is satisfied with what the agent has said and the buy has been an informed choice," C S Rao, chairman, IRDA, told DNA Money.

All insurance companies are likely to formulate questions on each product and submit them to the IRDA for approval.

This additional page, in the form of a certificate, will come with the policy document.

"Apart from some instances of mis-selling, we were concerned with a number of advertisements, which were not, however, technically advertisements, but kind of pamphlets with tall promises distributed with newspapers or communicated over telephone. These pamphlets, at times, carried just names of agents promising high returns," Rao explained.

The most rampant form of mis-selling is the financial advisor or agent misleading the customer to unrealistic promises of 40-50 per cent returns verbally, on the basis of the stock market boom last year, although, in reality, they cannot give indicative returns of more than 10 per cent a year.