Tuesday, October 23, 2007

Unit linked insurance plans (ULIPs) in India

In a ULIP, part of the monthly premium is used to provide insurance cover for the person and the remaining amount is invested in the stock market. If a person is wealthy or has no dependents, insurance cover may not be required. At a young age (less than 30), insurance premiums are low, so purchasing a term policy may be a better option.

The overheads for the ULIP are higher compared to a mutual fund, so the returns may be lower. If the ULIP units are purchased when stock market indices are low, the returns may be better than other forms of investment. However, the buyer of ULIPs should also be prepared for negative returns when share prices fall.

Most of the insurance companies offer attractive commissions to their agents for Unit Linked Insurance Plans (ULIP), so many people buy ULIPs without reading the fine print as these are marketed aggressively by companies providing investor services. However, depending on the health , age and financial status of an individual, other investment options may be more suitable.


Fortune Plus and Profit Plus from LIC

Unit Linked Endowment Plans from Life Insurance Corporation of India

Fortune Plus (T. no. 187)

Profit Plus (T. no. 188)

Features

Bond Fund, Secured Fund, Balanced Fund, Growth Fund

Unlimited switches ( 4 free switches per year)

Accident benefit rider

Critical illness rider (Profit Plus)

For Profit Plus, premium can be paid in one installment or a number of installments over a period of up to 5 years . Minimum premium is Rs 20,000 for single premium and Rs 10,000 per annum for term policies. It is available for persons up to 65 years

The premium payment is limited to 5 years for Fortune Plus and is available for the age group 12-60 . Minimum premium payable in the first year is Rs 20,000

Premium paid in Unit Linked Life Insurance Policies are subject to investment risks associated with capital Markets and the NAV of the units may go up or down based on the performance of the fund and factors influencing capital markets and the insured is responsible for his/her decisions. The Life Insurance Corporation of India is only the name of the insurance company and Fortune Plus and Profit Plus are only the name of the Unit Linked Life Insurance contracts and does not in any way indicate the quality of the contracts, its future prospects or returns .


InvestAssure Gold : Whole life unit linked insurance policy

Features

Five year premium period

Entry even at 70

Loyalty units every five years

Cover till the age of 100

Premium paid in ULIPs are subject to investment risks associated with capital Markets and the NAV of the units may go up or down based on the performance of the fund and factors influencing capital markets and the insured is responsible for his decision. Tata AIG Life Insurance Company Limited is the name of the insurance company and Invest Assure Gold is the name of the ULIP contract and does not in any way indicate the quality of the contracts, its future prospects or returns. This product is underwritten by Tata AIG Life Insurance Company Limited . Past performance is not indicative of future results.


LifeStageRP


Unit linked insurance policy, which adjusts equity % automatically with age

From ICICI Prudential Life Insurance
Features

Unit linked insurance plan which adjusts the investment according to age

Based on the age of the person, the debt equity component is periodically adjusted

Available in select cities

Age at entry : 18-75 years

Minimum premium: Rs 15,000 p.a

Options : Life cycle based and fixed portfolio , mid term option change allowed up to 4 times free of cost

Funds available : Flexi Growth IV, Maximiser IV, Flexi Balanced IV, Balancer IV, Protector IV, Preserver IV

100% fund value paid on surrender from 5th policy year

New fund opens at Rs 10 on August 25, 2007

Details of risk factors, terms and conditions are available in sales brochure

Investments in ULIPs are subject to market risk.

Horizon II Pension

Unit linked insurance policy (ULIP), equity % is higher initially and reduces close to the retirement age

From SBI Life

Features

Unit linked insurance plan which adjusts the investment according to age

Based on the age of the person, the debt equity component is periodically adjusted

Age at entry : 18-60 years

Minimum premium: Rs 12,000 p.a

Options : Dynamic plan and Growth plan.

For Dynamic plan, 80-100 % of the funds will be invested in equity markets initially and the remaining amount in bonds or the money market. As the person ages, the equity investment decreases gradually to 0-15% at the end of the 20 year term and the investment in bonds increases.

Growth plan is similar to dynamic plan, but the initial equity component is even lower <>

Once a dynamic or growth plan is selected, it cannot be changed

Funds available : Equity pension, bond pension and money market pension funds

100% fund value paid on surrender from 4th policy year onward.


UG Plus Gold


Unit linked insurance policy (ULIP)

From Bajaj Allianz Life InsurancE

Features

High allocation up to 85%

UL waiver of premium and UL family income benefit

Flexibility with premiums, top-ups and switches

Tax savings under section 80C and 80D of prevailing income tax regulations

Insurance cover of Rs 4.2 lakh for a policy taken at age 25 with a premium of Rs 2000 per month

Risk factors / warning statements : UnitGain Plus Gold is a Unit Linked Insurance Plan (ULIP). Investment in ULIPs is subject to risks associated with capital markets. The policy holder is solely responsible for his/her decisions while investing in ULIPs. Bajaj Alliance Life Insurance and UnitGain Plus Gold are only the name of the insurance company and the product respectively and does not in any way indicate the quality of the products, its future prospects or returns .


AspireLife


Unit linked insurance policy (ULIP)

From Bharti Axa Life Insurance

Features (claimed by the company)

Guarantees return of up to 175% of first year's premium

Invests up to 100% of all subsequent premiums

Partial withdrawals allowed

Premium holiday options

Flexibility to switch between investment funds

Risk factors / warning statements : UnitGain Plus Gold is a Unit Linked Insurance Plan (ULIP) and is different from traditional insurance products. "AspireLife" is only the name of the product respectively and does not in any way indicate the quality of the products, its future prospects or returns. Premium paid on ULIPs are subject to risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market. The policy holder is solely responsible for his/her decisions while investing in ULIPs .

2 comments:

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Anonymous said...

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