After having been spoilt for choices, customers buying unit linked insurance plans (Ulips) will have limited options from today (September 1). The number of Ulip schemes available in the market will go down from 500 to just 50.

Each life insurance company will have only two to three Ulips in their product portfolio for the next few months with the new Ulips norms coming into effect from today. All old Ulip schemes being sold in the market will go off the shelf.

The Insurance Regulatory and Development Authority (Irda) has approved around 50 new products for the 23 life insurance companies in India.

SB Mathur, secretary general, Life Insurance Council, said there were 500 Ulips products in the market as on January 2010. “We have been told that the number of products have gone down considerably,” Mathur said.

According to a senior ICICI Prudential official, Irda has approved one single premium and one regular premium product for the company. “The process to start training sales and distribution force will begin with these two products,” the official said.

After the controversy about Ulips having substantially low life cover as against higher market risk, the insurance regulator came out with new guidelines in June mandating insurance companies to enhance the life cover by 10 times, while reducing the surrender charges.

Ulips have been driving the growth for most of the life insurance companies due to the higher commission charges and lower cover. The regulator cracked its whip on the companies to ensure only customer friendly policies are there. “There were a lot of products to be cleared and hence we have started with just two to three products per company,” the Irda official said.

According to him, the regulator will clear more products coming forward. “The idea is also to educate the sales force thoroughly with few products at this point of time,” the official said. Irda will clear 15-20 more products including traditional policies.

Manik Nangia, corporate vice-president and head product management, Max New York Life Insurance, said they are launching two Ulips, one is a child plan and the other, a Ulip endowment plan.

“Whether having limited products in our sales basket will affect the sales of the company or not, only time can tell. But the idea behind (Irda) clearing limited product is to have good training for agents and sales practice. Once the new products start doing well, the company will file for other products.”

SBI Life Insurance has got approval for three products such as NAV Guarantee Plan and Flexible Ulip with P/E Fund. SBI Life in a press release said, “We shortly plan to launch a bouquet of uniquely-featured Ulips in the child, non-medical, pension and high net worth individual (HNI) category.”

Amish Tripathi, head of marketing and product development, IDBI Federal Life Insurance, said they are launching one Ulip. “From our product offerings only pension plan would go off shelf as we have not been able to work out a formula to offer guaranteed returns as mandated by Irda. Customer value proposition will increase with new products.”

Companies such as HDFC Standard Life, LIC and DLF Pramerica have got approvals for two products each.