Making unit-linked life insurance more attractive to customers: regulator’s recommendations

According to the regulator, insurance coverage under ULLI should be substantial. A policy that includes only low-probability risks (e.g. a plane or a train crash) and a long list of insurance exclusions do not serve customers’ interests.

The regulator’s letter offers an example of a good practice: a five-year contract with a 60-year old customer, providing for a benefit in case of the insured person’s accidental death or group I–II disability in an amount no less than 2.5 times the amount of insurance premiums paid by this customer. The premiums include both the part paid to cover the insurance risk and the part that is invested. Therefore, the above example with a lump sum premium of ₽3 million suggests that upon a customer’s death, his/her heirs would receive a benefit of ₽7.5 million as well as the proceeds from the redemption of units bought using the investment part of the premium paid by the customer. The law stipulates that the terms obliging the insurer to pay the investment unit redemption proceeds upon an insured person’s death from any cause must be included in an insurance contract. 

ULLI is a new long-term instrument to be offered by insurers from 1 January 2025.

The minimum requirements applicable to ULLI and established by the Bank of Russia will become effective on the same date.