ULIPS DEJARGONED

8/8/2019 ULIPS DEJARGONED

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What's insidey What is a ULIP?

y Types of ULIPs?

y ULIPs Vs Other Insurance Products?y What makes ULIPs so attractive?

y How to choose one for yourself?

y SEBI Vs IRDA

y Why?

y The final verdict?

y What next?


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ULIPS???y Unit linked insurance plan (ULIP) is life insurance

solution that provides for the benefits of risk

protection and flexibility in investment. Theinvestment is denoted as units and is represented bythe value that it has attained called as Net Asset Value(NAV). The policy value at any time varies according tothe value of the underlying assets at the time.


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Insurance

Investments

ULIP

In a ULIP, investors have the choice of investing in alump sum (single premium) or making premium

payments on an annual, half-yearly, quarterly ormonthly basis. Investors also have the flexibility to alterthe premium amounts during the policy's tenure.


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Types ofULIPsy Type I ULIP

On death/maturity you get:

Higher of sum assured OR fund value

y Type II ULIPOn death/maturity you get :

Sum assured PLUS fund value


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ULIPS Vs Other Insurance plansy The difference between a ULIP and other insurance

plans is the way in which the premium money is

invested. Premium from, say, an endowment plan, isinvested primarily in risk-free instruments likegovernment securities (Gsecs) and AAA ratedcorporate paper, while ULIP premiums can be investedin stock markets in addition to corporate bonds andGsecs.


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What else makes ULIPs so

attractive??y Transparency

ULIPs offer a transparent option for customers to plan

their various life stage needs through market-ledinvestments as compared to traditional investmentplans.


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y Insurance cover plus savingsULIPs serve the purpose of providing life insurance

combined with savings at market-linked returns. Tothat extent, ULIPs can be termed as a two-in-one planin terms of giving an individual the twin benefitsof life insurance plus savings. This is unlikecomparable instruments like a mutual fund forinstance, which does not offer a life cover.


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y Multiple investment optionsULIPs offer variety than traditional life insurance plans.So there are multiple options at the individual'sdisposal. ULIPs generally come in three broad variants:

Aggressive ULIPs (which invest 80%-100% in

equities, balance in debt)

Balanced ULIPs (invest around 40%-60% in

equities)

Conservative ULIPs(invest up to 20% in equities)


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y Flexibility

Individuals can switch between the ULIP variants

outlined above to capitalise on investmentopportunities across the equity and debt markets.Some insurance companies allow a certain number offree' switches.


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y Systematic Investment Plan

With SIP, individuals invest their monies regularly over

time intervals of a month/quarter and don't have toworry about `timing' the stock markets.


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How to choose one for yourself?y When you're buying a ULIP, make sure you select one

that works well for you.

yThe important thing is to look for and understand thenuances, which can considerably alter the way theproduct works for you.


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Take the following into

consideration:y Charges

Understand all the charges levied on the product over

its tenure, not just the initial charges. A completecharge structure would include the initial charges, thefixed administrative charges, the fund managementcharges, mortality charges and spreads, and that too,

not only in the first year but also through the term ofthe policy.


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Expenses Charged in a ULIPy Premium Allocation Charge

y Mortality Charges

y Fund Management Feesy Administration Charges

y Surrender Charges

y Fund Switching Charge


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y Fund Options andManagement

Understand the various fund options available to you

and the fund management philosophy and objectivesof each of them. Examine the track record of the fundsand how they are performing in comparison tobenchmarks.


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y Features

Most ULIPs are rich in features such as allowing one to

top-up or switch between funds, increase or decreasethe protection level, or premium holidays. Carefullyunderstand the conditions and charges associated witheach of these.

y

CompanyLast but not least, insure with a brand you can trust tohonour its commitment and service you according to

your requirements.


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SEBI Vs IRDAy Investment Product

y Mis-selling

y High commissions

y Front-end costs

y Life cover


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New Rulesy Minimum life cover

y Minimum policy term

y Partial withdrawal

y Commission


19/19

Thank You

Documents

ULIPS DEJARGONED