[Solved] Which of the following statements about ULIPs is NOT correct as per current IRDAI guidelines? — Ans: Policyholders can switch funds during the policy term without any charges. | Insurance Awareness

Insurance Awareness - Life Insurance - LIC

Which of the following statements about ULIPs is NOT correct as per current IRDAI guidelines?

APolicyholders can switch funds during the policy term without any charges.

BULIPs provide both life insurance cover and investment opportunities.

CReturns on ULIPs are market-linked and not guaranteed.

DULIPs have a mandatory lock-in period of 5 years.

Step-by-Step Solution

Step 1: Analyze fund switching rules
IRDAI allows limited free switches in ULIPs; beyond that, charges may apply.
Step 2: Evaluate each option
Policyholders can switch funds during the policy term without any charges. is incorrect because fund switching is allowed but not always free without charges.
Final Answer:
Policyholders can switch funds during the policy term without any charges. → Option A
Quick Check:
ULIPs combine insurance and investment, have a 5-year lock-in, and returns depend on market, but fund switching may incur charges after free limits.

Quick Trick: Remember limited free switches, not unlimited free switching.

Common Mistakes:

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