The Insurance Regulatory and Development Authority (IRDA) have asked insurance companies to disregard the order from the Securities Exchange Board of India (SEBI) regarding the sale of ULIPs.

Earlier SEBI has permitted these companies to sell ULIPs (unit linked insurance policies). But now IRDA has tightened the screws and invoked its power under section 34(1) of the Insurance Act.

It has asked the insurance companies to stop selling these ULIPs and instructed them to continue business as usual.

IRDA has informed that the SEBI order on ULIPs may disrupt orderly function and will impact unfavorably on the policyholders' interest. Moreover, it has apprehended that such activities may lead to forced premature policy surrender. The policy will not going to protect the interest of the public as per IRDA.

Earlier SEBI has contended ULIPs similar to mutual funds and anticipated to come under the purview of SEBI's regulations. Moreover, there has been debate over the high charges and the rampant mis-selling in ULIPs. However, SEBI has also ordered the 14 insurance companies to stop selling any more ULIPs.