Insurers to change Ulip structure in line with DTC

Insurers are set to tweak their unit linked insurance product (Ulips) offerings once the Direct Tax Code (DTC) kicks in. Ulip structures are likely to undergo a change and a higher life cover may be offered to qualify for tax benefits. Clause 70 of the DTC, 2010 specifies that only insurance policies where the annual premium paid does not exceed five percent of the capital sum assured will qualify for deduction. This implies that the minimum life cover should be 20 times the premium paid. Under the current regulatory guidelines, insurance companies are required to offer a minimum cover of 10 times the premium paid in a year. “If DTC comes with the guideline then whether the regulator says or not we will do it,” said a senior official with a leading insurance company. “Clearly insurance companies will move towards building product structures that qualify.”

Source: Indian Express