The regulator has asked Bajaj to withdraw one policy and Aviva its entire range of Ulips, as they are actuarial-funded plans. However, it hasn't stipulated a time period for the pull out. "We are not strict about the deadline, as the companies selling them will have to change their entire IT system and may require time," IRDA chairman C S Rao said .

Bajaj, which had to phase out its most popular plan, has started training its agents to sell other policies: "We have pulled out Capital Unit Gain and are now running refresher courses to reorient our agents to sell other policies offered by us," a Bajaj Allianz Life official said. The company has also filed a new policy for approval to replace Capital Unit Gain.

In order to ensure that these companies do not suffer huge losses, IRDA has said the new policies will be cleared as soon as possible. Rao explained, "We will clear the plans at the earliest. Till then, we have directed companies to get the illustrations of actuarialfunded Ulips attested by policyholders to acknowledge their understanding of the product."

IRDA has asked these plans to be pulled out on grounds that their cost structure is complex. Al though the charges are evenlyloaded, companies levy additional charges to recover their high costs in the initial years. As a result, policyholders lose heavily in case of a premature exit.

In mature markets, actuarialfunded products are not allowed. Said National Insurance Academy director K C Mishra, "In countries like the UK, Japan and Australia, actuarially-funded products are not encouraged since they are difficult to understand and are not transparent enough."

Another round of Ulip reforms also looks likely. IRDA is looking at cost structures and has expressed interest in simplifying cost heads. "Last year, we had unified cost heads. Now, we are looking to reduce cost heads to make it easier for investors," said Rao.