mumbai insurance sector regulator irda on monday came out with a set of guidelines directing life insurers to offer unitlinked insurance plans ulips at lower cost to buyers while also providing higher life cover though with a longer lockin period while life insurance customers will benefit the new rules could lead to a substantial cut in commission for insurance agents and force life insurance companies to drastically cut costs leading to lower sales interestingly irdas decision to change rules governing ulips came within three months of stock market regulator sebi saying ulips were investment products as well on which sebi is the sole authority and banning 14 life insurers from selling ulips without its permission irda on monday said insurers would be allowed to charge up to 4 on annual premium paid on ulips for the first five years and thereafter charges will be reduced during the tenure of the policy for plans of 15 years and above the charges will be restricted at 225 of annual premium these cuts in charges would make ulips more attractive to buyers since they will have to pay lower charges for the same premium they paid earlier in the long run this will add to ulip buyers funds lower charges will benefit customers said gv nageswara rao md ceo idbi fortis life insurance however this could mean lower commission to agents which might affect ulip sales he added the life insurers will also have to cut their expenses and becuase of lower sales it may affect their topline as well as bottomlinethe capping of expenses guidelines have been made very stringent this will have quite farreaching consequences for the industry said kamesh goyal country manager ceo bajaj allianz life insurance small regular premium policies will become unviable thus a large proportion of people who were paying premium of less than rs 15000 or so a year will suffer badly goyal added there is also fear in the insurance industry that the new commission structure might not be able to sustain an insurance agents income and this channel could suffer irda has also increased the lockin period for all ulips from three years to five years now including the topup premiums the decision is expected to make these products more like longterm financial instruments that can provide risk protection longer lockin would also discourage those insurance buyers who often entered ulips which are marketlinked products for short term gains