A whole new category of life insurance products, the index-linked insurance plans has been decided to introduce after the discussions held between life insurers and the Insurance regulatory and Development Authority (IRDA) with an expectation to bring more clarity along with the final guidelines on product designs.
The plan will operate more or less like a bank account where each policyholder can manage separate accounts. The account value will be reflected by premium paid by the policyholder as well as the interest gained from the particular index to which the fund is linked.
In order to attain this advantage the policyholders need not pay any, other than mortality charges. The product guidelines will highlight the benefits of policy document by showing the working of funds and the benefits which can be earned. Minimum death benefit under the new plan will be the same as of Ulips, a market linked category, which is currently 10 times the life cover or sum assured.
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