ULIP

Best Ulip Insurance Policy

Best Ulip Insurance Policy

Best Ulip Insurance plan

Best Ulip Insurance plan

Should you Continue your ULIP Policy

Let’s look at the parameters on which you can evaluate your ULIP Policy and take a decision if you should continue paying the yearly premium, go for a premium holiday or surrender the policy.

Charges structure: ULIP Policies normally levy Premium Allocation & Policy Administration Charges. The extent of these charge vary in each policy. From the premium you pay premium allocation charges are deducted and net premium is invested in the fund as per options selected by you. Policy Administration Charges are normally levied on a monthly basis. If your policy was taken few years before, it is likely to be a high cost structure. Generally, if these charges are exceeding 1% of the annual premium, then it makes us uncomfortable and we normally raise a red flag.

Lock in Period: Normally most ULIPs come with a lock in period of at least 3 years. So even if your cost structure is high, but lock in period is not over, then you would need to continue the policy at least till the lock in period is over.

Surrender Charges: While you make a decision if you should continue your policy, please also have a look as to how much surrender charges you will have to incur. Your policy may have zero surrender charge after about 5 years. So based on the surrender charge currently being applicable, it may be a good idea to wait for a year or so and then surrender your ULIP policy.

Fund Performance: Your policy is costly but is your fund is doing well? If yes, then you may end up with a positive ROI, depending upon market situations. If your policy is costly and the fund is not doing too well, then this may further worsen the situation. Please also check if your funds are invested appropriately mapped to your risk profile? Say if you are in early 30’s and have 5+ years to go before this policy matures, then it’s likely to be a good idea to invest a major part of your fund corpus in this ULIP in Equity. Most ULIPs allow 4 fund switches free in a year. So you could accordingly switch your funds

Insurance Cover: Do you still need the Life insurance cover available in the ULIP policy? Your Life Insurance corpus is a function of your financial liabilities. If you have sufficient assets to take care of your financial liabilities, then you may not need a life insurance cover. On the other hand, if you have a sizable cover in the ULIP policy, then you should check your overall need of Life insurance and assess if you will be able to get a new life insurance cover. If you have a medical situation (e.g. Diabetes) then getting a new cover may be difficult or expensive.

Expected benefits: Some ULIP covers give Sum Assured+ fund value. Some ULIP covers provide Highest NAV guarantee. Some ULIP covers have a premium continuance option i.e. the policy continues even if you die mid-way, no further premiums are to be paid and the policy cash flows are paid to the nominee. Some ULIP covers provide additional benefits like 102% premium credit after 10 years. Some ULIP covers allow you to take a loan against fund value. So, please consider such factors while you make a decision to continue or surrender the policy.

If you do happen to take a decision to surrender or go for a premium holiday, then please communicate your decision in writing to your Insurance Company, fill up required forms and follow up with them to get a confirmation response. You may seek help from the Advisor or Customer Support Executive from the Insurance Company to guide you while you make this decision though they may be biased in you continuing their policy. Alternately, you can consult your Financial Planner.

Source: http://www.gettingyourich.com/blog/should-you-continue-your-ulip-policy

Ulip Insurance India

Ulip Insurance India

ULIPS and Section 80C

One of Investments which are eligible under Section 80C deduction is investment in ULIPS.

What is a ULIP? ULIP or Unit Linked Insurance Plan has a mix of insurance along with investment. From a ULIP the goal is to provide wealth creation along with life cover.  The seller of a ULIP puts a portion of your investment towards life insurance and rest into a fund that is based on equity or debt or both and matches with your long term goal. These goals could be retirement planning, children’s education or another important event you may wish to save for.

Tax Deduction under Section 80C? Deduction is available on ULIPS under Section 80C, provided the sum assured is at least 10 times the annual premium. This is within the overall limit of Rs 1,50,000 of Section 80C. Of course you can invest a higher amount, but the deduction will be limited to Rs 1,50,000.

How do ULIPS work? ULIPS are usually designed in a way that they allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of how the market is performing. It has been noticed that many of the ULIP buyers do not have the time or adequate knowledge to understand the mix they must keep between debt and equity and also when to make the right switch. Therefore, if you are someone who has deep knowledge of how the fluctuation of interest rates and equity returns work – this may be the product for you. Also, it is wiser to invest in a ULIP with a long term horizon, of at least 10 years.

Can Best Ulip Insurance plan be bought for others? An individual may purchase a ULIP in his own name, or for spouse or any child. Child may be married or unmarried, dependent or independent, minor or major – all these investments shall qualify for deduction under Section 80C.

Tax benefit on maturity? You are allowed to make partial withdrawals after 5 years. There is no tax on the withdrawals & maturity for ULIPS provided the sum assured is at least 10 times the annual premium.

Source: http://blog.cleartax.in/ulips-section-80c/

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.