NEW DELHI (Reuters) - The Securities and Exchange Board of India (SEBI) has barred 14 life insurance companies in India from issuing unit-linked insurance products (ULIPs) with immediate effect, according to a notice posted on its website.
Such products, which work in a similar way as mutual funds, should not be launched nor should money be raised from investors by way of new or additional subscription, till companies obtain the certificate of registration from SEBI, it said in its order on Friday.
On Saturday, the Insurance Regulator Development Authority (IRDA) assured policyholders their investments are safe.
"Policyholders of the ULIPs offered by different insurance companies are assured that these policies are safe and secure and the matters arising out of the recent orders of the SEBI will be addressed expeditiously in the appropriate forum in accordance with law," IRDA said on its website.
SEBI had issued notices to these insurance firms in January and December seeking explanation as to why ULIPs were launched without its approval and why appropriate action should not be taken against them.
"ULIPs offered by the said entities are a combination of investment and insurance and, therefore, the investment components are in the nature of mutual funds which can only be offered/launched after obtaining registration from SEBI …," the SEBI said in its order.
Such products, introduced in 2001, have been favoured by investors in the last few years because of the market-linked returns they offer.
For complete details of SEBI order click here
(Reporting by Aditya Kalra)