Read New Rules for Life Insurance applied after 2021

Ulips Life Insurance

  • The minimum life insurance in ULIPs was only 10 times the annual premium. This minimum level of life coverage in ULIPs will now be 7 times, down from 10 to those below 45.
  • In order to provide minimum coverage, insurers must offer minimum coverage of 10x the annual premium for those under 45 years old and 7x for those over 45. If policyholders aren't keen on the protection element, lower mortality charges will be charged.
  • The investment side of the premiums will receive a higher percentage. However, one should note the important point that to maximize tax benefits under Section 80C and 10(10D), the life policy has to offer a cover of at least 10 times the annual premium. Policies with more than 7 times coverage would be exempt from the tax breaks provided by Section 10(10D).

Maximum Lump Sum Withdrawal

  • The maximum amount of withdrawal permitted at maturity under pension plans has increased from one-third to 60%
  • However, this will not bring insurance pension plans at par with the National Pension System (NPS). The 60% withdrawal permitted at maturity in NPS is exempted from tax.
  • Pension plans allow 60% withdrawal. Withdrawal of up to one-third of the corpus is tax-free. Anything beyond that is taxable.

Minimum term to acquire surrender value in traditional plans

  • You don't have to wait for 3 years before your policy has a guaranteed surrender amount. Surrender value refers to the amount you will get if you choose to leave early.
  • Policies will now have the minimum guaranteed surrender value regardless of their premium-paying terms.

Freedom to choose your annuity provider

  • Annuity, which is a guaranteed income pension that the policyholder receives from the date of vesting until the day of death, is a regular, guaranteed pension income.
  • The new rules have also liberalized the conditions for purchasing annuities. A policyholder is now forced to buy annuities at maturity through the insurer that has deferred a pension plan.
  • Policyholders now have the option to approach insurers that offer higher rates for up to 50% of their corpus. An important change would be Open Market for the purchase of annuities up to 50% of the corpus.
  • In an earlier situation, policyholders suffered because they couldn't shop around for better rates. The Relaxation of this restriction will give policyholders more flexibility to search for better rates.

After you have paid the entire five-year premium, your premiums will be reduced by up to 50%.


This is not a benefit in price, but an option to allow for policy flexibility. You can pay half of your five-year premium upfront and receive a reduced amount assured for the remaining five years.

There are two types of non-linked products: pre-risk products and savings products. These are your term plans. This regulation is for your terms plans. A term plan can be purchased for one month and might prove useful if you're planning to take a longer vacation.

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