The changes and its effects are as under:

• Lock in for Five Years and Premium Payment Term : Minimum lock-in period has been revised from the current 3 years to 5 years and barring single premium policies, the minimum payment term has also been raised to 5 pay.

• Increase in Minimum Sum Assured : The minimum sum assured multiple has been increased to 10 times for age at entry below 45 years and 7 times for age at entry above 45 years.At no time can the sum assured be less than 105 percent of total premium paid including top ups . All top ups also must have life insurance cover built into them.

• Net Reduction in Yield for Every Year from Year 5: This new guideline stipulates the maximum net reduction in yield every year from 5th year. It is primarily an extension of the earlier stipulation of maximum net reduction in yield of 3% for policy term up to 10 years and 2.25% for policy term above 10 years.

• Cap on Discontinuance Charge: IRDAI has introduced a cap on surrender charge, now termed as policy discontinuance charge, basis the year of discontinuance and annual premium. This allows life insurers to charge only a small penalty on early surrender of policy.

• Modifications in Unit Linked Pension Products : Partial withdrawals in Unit Linked Pension products will not be allowed. On maturity, one third of the corpus could be taken as lump sum and rest must be used for buying annuities. This change will ensure a larger corpus is collected and used for retirement planning and not for other life stage needs.IRDAI has also made it mandatory that all unit linked pension products must offer minimum guaranteed return which would be specified by IRDAI from time to time.Even spread of charges during the lock-in period. The new guidelines stipulate that the overall charges in ULIPs should be spread evenly over the lock-in period of 5 years.