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The national insurance regulator may increase the lock-in period of for Unit Linked Insurance Policies by two years to five years. This decision is being taken to reduce false selling and early lapsing.
"We are discussing the measure of increasing the lock-in period to five years so as to reduce early lapsation of policies which financially affects life insurers," R. Kannan, a member of the Insurance Regulatory and Development Authority (IRDA), told the reporters.
The early lapse of policies can pose problems for the life insurers as they will not be able to recover their market and administrative costs.
"We are waiting for the consensus from the industry on the issue," said Kannan.
"A ULIP is good for a policyholder if he holds on to the policy for 10 years. But nowadays policyholders are exiting within six months," said the official.
The regulator has plans for launching a customer portal in six months for helping the policyholders to contact their respective insurance companies and lodge claims.
"When a policyholder registers a claim through the portal, we would also get relevant data and monitor the settlement of claims," Kannan said.
