Policyholders of ULIPs get more relief. In its latest circular, IRDAI has clarified that policyholders can spread their withdrawal plans under settlement option in ULIPs across five years.
A few days back, IRDAI has asked insurance companies to give their investors an option to opt for settlement payment in ULIPs maturing till May 31 considering the sharp fall in equity markets. Settlement payment offers policyholders an option to receive maturity proceeds in a staggered way just like SWP in mutual funds.
IRDAI said that policyholders can choose the quantum of such withdrawals like monthly, quarterly, half yearly and yearly depending on the availability with insurers but this cannot be changed later.
While the insurance regulator does not allow partial withdrawal during the settlement period, investors can redeem their maturity proceeds completely at any given time. Also, policyholders opting for settlement option cannot avail mortality benefits i.e. insurance will pay the remaining units to nominee in an event of death of policyholder during the settlement period.
In addition, insurance companies can charge management fees only. There will be no additional charges.