Ulips Back In Traction

Boom in stock markets and improvement in the overall economy has made unit-linked insurance plans (ULIPs) to regain their traction once again.

After 2010, when the Insurance Regulatory and Development Authority (IRDA) revamped ULIP norms, private life insurers shifted their focus to traditional products. This led to massive fall in ULIP sales.

Typically, when stock markets rise, a lot of customers tend to surrender their policies to book profits but in the first half of current fiscal, insurers have seen a fall in surrender of ULIPs.

Insurers say that increase in interest in ULIPs has been a good opportunity for insurers to move towards a balanced product mix in line with customer needs, unlike earlier where the industry witnessed a more dominant mix in favour of either ULIPs or traditional products.

Life insurers are also encouraging customers to hold on to their ULIP products for at least 8-10 years to avail maximum product benefits.

However, the IRDA has taken cautious note of surge in ULIP sales, particularly, after the 2005 stock market boom when private life insurers ULIP sales surged and the industry faced several complaints of mis-selling.

In a recent guideline, The IRDA has asked insurers to structure Best Ulip Insurance Policy as long term investment product and return at least 90% of premium paid by the policyholders.

IRDA wants ULIPs to act as savings product rather than a term product, specially discouraging them for older age groups where mortality charge is higher.