Calcutta, Aug. 16: Life insurance companies, which have been making money hand over fist from selling unit-linked plans (Ulips), will now have to tread the water carefully.

The Insurance Regulatory and Development Authority (IRDA) today came down heavily upon insurers by directing them to stop selling Ulips that are designed around complicated fee or charge structures. Called actuarial-funded unit-linked plans in technical jargon, these funds have very high charges or fees that are recovered from a policyholder’s fund over a period of time rather than upfront.

IRDA chairman C.S. Rao said the fee structure of actuarial-funded Ulips was too complicated for a common man to understand.

The insurance regulator, which had earlier approved these products for sale, has given life insurers a fortnight to recall these policies from distributors and agents. From September 1, life insurance companies cannot sell actuarial-funded products.

The IRDA decision will hurt Bajaj Allianz Life Insurance Company and Aviva the most. The Capital UnitGain plan of Bajaj Allianz Life is its most popular Ulip. Aviva also has quite a few similar products.

“Under our actuarial-funded unit-linked plan, Capital UnitGain, a policyholder gets two unit accounts — capital units and regular units. The regulator has given us time till September 1 to take this product off the shelves. So, we won’t sell Capital UnitGain from next month. However, the policies that we had already sold won’t be affected by the directive. There will be no change in those policies,” said Sam Ghosh, chief executive officer of Bajaj Allianz Life Insurance Company.

Aviva Life Insurance said, “We have had no communication from the IRDA on any ban of actuarial-funded products.”

Bajaj reshuffle

A major reshuffle is expected at the top management of Bajaj Allianz Life Insurance Company. According to a source, chief executive Sam Ghosh will be promoted and transferred to a West Asian country. Kamesh Goel, chief executive officer of Bajaj Allianz General Insurance Company, will replace Ghosh.