Advertising ULIPs as Investment Products banned by IRDAI

IRDAI issued a ‘master circular’ dated 19 June, 2024, wherein guidelines to empower policyholders are outlined. The insurance regulator has barred insurers from advertising unit-linked and/or index-linked products as ‘investment products’.

IRDAI has asked the insurance companies to establish an advertisement committee that has board approval or designate a senior officer from the distribution channels to oversee and approve ads to make sure they are truthful and not deceptive. 

For addressing policyholder grievances, IRDAI asked insurers to develop a “robust, technology-based mechanism”.

The master circular said there shall be no advertisements on the following:

• On services which aren’t related to insurance
• On comparison of rates or discounts to erstwhile tariff (in case of a general insurance product)
• Outlining the potential benefits of an insurance product without a fair indication of related risks, if any
• Revealing benefits partially without corresponding limitations/conditions/ implications
• Exaggerating the product’s benefits
• Belittling the reputation of a competitor or the insurance industry

Advertisements for unit-linked insurance products, index-linked products, and annuity products with variable annuity payment options are required by IRDAI to provide sufficient, precise, clear, and current information in simple language.

Promotion of unit-linked and/or index-linked goods as “investment products” is prohibited.

The warnings and associated risks must be included in all marketing for linked insurance and annuity products with variable annuity payment possibilities.

Regarding hoardings, posters, and audiovisual media advertisements, IRDAI requested the following information: Companies must state that linked insurance products/annuity products with variable annuity pay-out options are different from the traditional insurance products and are subject to risks.

“No press release or statement shall be issued by the insurer without referencing the life insurance coverage and the associated products,” says the circular.