SEBI Ban ULIP Policy - A Required Step for Customer Happiness

Let me first congratulate SEBI (Securities and Exchange Board of India) for taking giant and required steps for customer happiness.

Brief of SEBI's ban action:
SEBI bans all 14 Private companies who are promoting or selling ULIP policies. They can not sell policy to new customers or collect premiums from the existing customers. in short, Companies can not take any actions for ULIP products now.

What is a ULIP:
The ULIP policy is combination of Insurance and investment. But end of the day customers do not get enough insurance converge  and  returns of investments as large part of premium amount is deducted as ULIP charges 

Why SEBI ban ULIP:
Main Reason: These policies were announced or made available without obtaining registration from the SEBI and they did not reply to SEBI's notice issued in JAN-2010.
Other reasons:
-  The companies do not disclose their investment portfolio to the customer too.They declare only NAV.
The ULIP policy is not transparent to the customers and there are so many term and conditions are associated with ULIP policy. The insurance agent never highlights these conditions to the customers and the customers have to suffer during the claim procedure.

Impact of SEBI's ban action:
For new customers: we should not think of buying ULIP policies. it is such a worst product ever designed for customers.
For existing customers: Not clear actions defined for existing customers but, be assured that SEBI and IRDA will take good actions for existing customers.

Why we should be happy:
Millions of policy holders will not be cheated further with such frauds. These companies were getting more than 70% revenue from ULIP premiums since Year 2005.It suggests 70% of policy holders has been misguided and not getting enough returns on the policy.

You can read this circular at SEBI' website 

List of banned insurance companies:
Aegon Religare Life Insurance Company Limited
Aviva Life Insurance Company India Limited
Bajaj Allianz Life Insurance Company Limited
Bharti AXA Life Insurance Company Limited
Birla Sun Life Insurance Company Limited
HDFC Standard Life Insurance Company Limited
ICICI Prudential Life Insurance Company Limited
ING Vyasa Life Insurance Company Limited
Kotak Mahindra Old Mutual Life Insurance Limited
Max New York Life Insurance Co. Limited
Metlife India Insurance Company Limited
Reliance Life Insurance Company Limited
SBI Life Insurance Company Limited
TATA AIG Life Insurance Company Limited

Read also:


  1. Finance Minister Pranab Mukherjee has restored the status quo on unit-linked insurance schemes (ULIP) and both IRDA and SEBI have agreed on a legally binding verdict from Court on ULIP. The earlier order by SEBI has been taken back.
    But,This is no doubt that ULIP is a worst insurance product for policy holder.

  2. As on Apr 14, 2010,No new ULIP will be launched without SEBI's approval but insurance companies can retain existing ULIP policies to protect customer interest.