Budget 2012-13: Hike in service tax makes traditional plans unviable

Pankaaj Maalde, Head - Financial Planning, Apnapaisa.com

Traditional insurance plans are sold heavily, historically, since LIC came into existence. Traditional plans are a combination of insurance cover and saving element coupled with tax benefit. Previously only LIC was pushing for these products but now private insurance companies have also aggressively launched many traditional plans due to ULIP products becoming difficult to sell now as the stock prices have corrected. Birla Sun life, which is the pioneer of unit-linked plans in India, also had to come out with traditional plans to survive and sustain in the market. Traditional plans are very easy to sell as they are not complex as compare to ULIPs. Endowment plans, money back plans, whole life plans and children