The Insurance Regulatory and Development Authority (IRDA) is likely to allow the life insurers to introduce the Universal Life Policy (ULP) which allows the customers to change the policy amount after buying the policy for a different amount.
The regulator is currently studying the UK model of this policy which is at the front position in this segment. This policy is expected to offer the customers flexibility in terms of both the premium paid and sum assured.
In UK, the ULP policyholder is free to change terms of the amount of death benefit at his convenience.
The policy also offers lapse protection, which ensures that the policyholder will continue to enjoy the benefits as long as the premiums are paid regularly.
The customer can also make a choice in the timings of the premium payment. The premium can either be paid at regular intervals or in one stroke. However the amount of premium to be paid cannot be changed.
Another feature of this policy is that it will not get cancelled automatically even if the customer fails to pay the premiums.
ULP also helps the customer to raise finances by allowing him to borrow money from the insurer in the form of surrender value and loans