The insurance regulator on Monday fully liberalized the pricing mechanism for life insurance products, aiming to encourage more market-driven competition among insurers.

The new policy, to be implemented on Oct 1, will allow insurers to set up their own interest rate for dividend-paying life insurance products, which previously was capped by the regulator at around 2.5 percent.

The latest move marked the completion of the pricing reform of the country's life insurance products. The regulator has already liberalized interest rates for term and universal life insurance products.