A note by Morgan Stanley had said that life insurance products, particularly Ulips (unit-linked insurance plans) could appear relatively attractive from a medium- to long-term perspective.
With the tax saving season coming to a close in the next few weeks, life insurance companies have rushed in to offer unit-linked insurance products (Ulips) having dual benefits of investment and insurance.
Max Life Insurance has launched an online ULIP plan- Max Life Online Savings Plan. The product has been designed on the basis of consumer research undertaken by Max Life and web aggregator Policybazaar.com.
The January-February-March period contributes the maximum premium to insurance companies since a large set of policyholders buy insurance in these 3 months for tax saving purpose. With Ulips also offering flexibility as well as the option to choose from an array of funds, on a longer tenure of 10 years and above, they yield better results compared to traditional products.
For instance, Max Life’s Ulip has two variants to help consumers plan for long term wealth creation or build corpus for retirement needs and save for their child’s future.
While the budget imposed a 10 percent long-term capital gains tax (LTCG) on equity investments, it was anticipated that all the funds will now flow into Ulips. A note by Morgan Stanley had said that life insurance products, particularly Ulips (unit-linked insurance plans) could appear relatively attractive from a medium- to long-term perspective.
It had also said that taxation of insurance products is governed by Section 10d (of Income Tax Act), where the income is tax-free in the hand of the investor at the time of withdrawal.
Two days ago, Bajaj Allianz Life Insurance launched goal-based Ulip, Bajaj Allianz Life Goal Assure. The Return of Mortality Charges (ROMC) feature of Bajaj Allianz Life Goal Assure guarantees that a policyholder will get back the cost of the life cover when the policy matures, thus enhancing the value of their corpus on maturity.
Tarun Chugh, Managing Director and Chief Executive Officer, Bajaj Allianz Life Insurance said that today’s generation of retail investors, have expanded the definition of life goals and are looking for investment solutions that are value packed, convenient and backed by reliable investment performance.
In this product, the customer who opts to receive the maturity benefit in installments (and not lump-sum) over a period of five years will receive the benefit of Return Enhancer which is an addition of 0.5 percent of each due installment.
Yashish Dahiya, CEO and Co-Founder of PolicyBazaar.com said, “The latest generation of Ulips have emerged as a very strong investment-cum-insurance product.”
For larger companies like ICICI Prudential Life Insurance and HDFC Life, Ulips constitute a large portion of their portfolio. About 82.9 percent of the annualised premium equivalent (APE) for nine months ended December 31, 2017 came from Ulips for ICICI PruLife. For HDFC Life, 59 percent constituted Ulips in their product-mix for nine months ended December.