The Bank of Russia has issued recommendations for insurers to enhance the appeal of unit-linked life insurance (ULLI) programs. ULLI combines traditional life insurance with investment management in unit investment funds. In a letter addressed to the All-Russian Insurance Association and National Association of Securities Market Participants, the Bank emphasizes that both the insurance and investment components should be well-represented in contracts.
The regulator insists that insurance coverage under ULLI must be significant. Policies that only cover low-probability risks, such as plane or train crashes, along with extensive exclusions, do not adequately serve customers’ interests.
An example of good practice is highlighted by the regulator: a five-year contract for a 60-year-old customer offering benefits in case of accidental death or group I–II disability amounting to no less than 2.5 times the insurance premiums paid. This includes both risk coverage and investment portions. For instance, with a lump sum premium of ₽3 million, heirs would receive ₽7.5 million plus proceeds from redeemed units bought with the investment portion upon the customer’s death. The law requires that terms obligating insurers to pay these proceeds upon death from any cause be included in contracts.
ULLI will be available as a new long-term instrument starting January 1, 2025. Minimum requirements set by the Bank of Russia will also take effect on this date.
