New restrictions will affect the sale of investment and universal life insurance policies (ILI and ULI), according to the draft instructions prepared by the Central Bank. Such insurance includes a risk and investment component: part of the funds invested by the client goes to insurance coverage in case of death, and part is invested to generate additional income.
The Bank of Russia wants to restrict sales of “exclusively investment products under the guise of insurance”, the press service of the regulator informed.
Insurers will have to provide for capital protection and imputed returns on any investment life insurance contract and endowment life insurance policies for up to seven years. If the insurance event does not occur before the end of the contract, the client will be able to get his premium with accrued interest back.
Buyers of policies with regular installments will have the opportunity to cancel them and get their money back. Before the third insurance premium is paid, the redemption amount must be at least the paid insurance premiums. Insurers now determine the redemption amount for the policy on their own.
ILI sellers will have to indicate in the contract that the insurance coverage for such a policy starts from the moment the first insurance premium is paid.
In the event of the insured person’s decease, the payments under the ILI or ULI policy must be at least twice the size of the insurance premium. If the insurance covers other risks, then the coverage cannot be lower than the insurance premium paid by the client.
Photos are from open sources.