Under The Ulip Shade

Print Edition: July 2011

When did you last receive a call from a telemarketer selling a unit-linked insurance plan ? It must have been a while now.

Ulips, which not long ago were the darling of insurance brokers, have fallen out of favour among intermediaries after the new norms for the product came into effect from September 1, 2010.

It is no longer as lucrative for brokers to sell Ulips after the Insurance Regulatory and Development Authority (Irda) placed severe restrictions on upfront commissions and charges, which prior to the new norms at times shaved off the entire first year premium paid by a policyholder.

Often investors had to wait for years to recover their initial investment. Under the new norms, Ulips are now clearly structured to favour the consumer. With far less being deducted from the premia compared to pre-September 2010, more is invested, thereby holding out potential for higher returns. The regulator has also stipulated higher minimum insurance covers on Ulips while they have been positioned as longterm products with longer lock-in stipulations.

So are you thinking of setting aside some of your money for purchasing Ulips? With brokers not willing to reach out to you to push the products and explain their features, you might find it difficult to decide on which one to settle for. We lend you a helping hand. In the following pages we provide you a comprehensive guide on how to look at Ulips.

With their present structure, Ulips could be good investments, provided you are willing to take a longterm call.

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