The Bank of Russia has outlined new guidelines for the sale and customer information of unit-linked life insurance (ULLI) policies. These regulations will be effective from January 1, 2025, allowing insurance companies to offer this product that merges traditional life insurance with investments in unit investment funds (UIFs).
According to the Bank of Russia, insurers must provide customers with a key information document when signing ULLI contracts. This document should detail the conditions and risks associated with the product. It must include specifics on how funds are allocated between life insurance and investment, permissible transactions with UIF units, as well as any commissions charged by insurers.
Customers will be reminded after signing that a ULLI contract is not a bank deposit. They have the option to cancel their policy during a cooling-off period for a full refund. If canceled within four days, customers receive both the insurance and investment parts of their premium back, even if there is a decrease in value. Termination within 30 days allows customers to redeem their units at current value along with receiving their insurance premium.
The Bank's ordinance also sets rules for investment transactions under these contracts. Customers can withdraw from the contract if six or more exchange or redemption transactions occur within a year. This measure aims to prevent insurers from altering investment strategies to earn extra commissions.
Additionally, exemptions from insurance coverage are restricted under these new rules. Insurers can only exempt payments in cases involving alcohol, drug, or toxic poisoning events related to insured individuals. Companies are required to settle claims for insured events within 30 days.