Insurers won’t be allowed to sell highest NAV plans from Oct 1

India Infoline News Service | Mumbai |

If you have bought a highest NAV guaranteed plan, it will continue to be governed by the terms and conditions as outlined in the policy contract

According to IRDA (Insurance Regulatory and Development Authority) guidelines effective October 1, insurance companies wont be allowed to sell highest NAV (net asset value) products anymore.

However, if policyholders have bought a highest NAV guaranteed product, it will continue to be governed by the terms and conditions as outlined in the policy contract.

TS Vijayan, chairman, IRDA, said in a circular that products with highest NAV guarantee and fund level guarantee and products for which benefits were linked to any external index (index-linked products) would have to be withdrawn from October 1. “It is also clarified that all individual products filed after September 30, 2013, shall be considered for approval in due course along with all other products received,” he said in the circular.

Hence, old products will have to be completely phased out from January 1, 2014.

Essentially, highest NAV guaranteed products are capital guarantee products that ensure that the amount you invest does not lose value and you get some upside of equity. It is wrong to think that you get Sensex-linked return, with zero risk.
 

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