While unit-linked insurance policies (Ulips) of life insurance companies have come under disapproval for their focus on investment rather than offering sufficient life cover, insurers point out that a number of ULIP offer very much high humanity benefits that can be as high as 50 times the annual premium or still higher in a few select instances.
The minimum sum assured (life cover) in Ulips is 5 times and most policies offer cover of between 5-10 times the annual premium. The life-cover multiple could also be the term of the policy or otherwise what is called as sum-assured several.
HDFC Standard Life offers up to 40 times life cover on all its Ulips, Aegon Religare Life’s Protect Gain and ICICI Prudential Life Insurance Lifetime Maxima offer up to 50 times humanity cover. Met Life Insurance’s Met Smart Life offers life cover up to 100 times the annual premium. Typically, in an Ulip, the higher the risk cover, the higher the mortality charges are and therefore the lower is the amount invested in equities.
Akshay Gupta, chief marketing officer, Bajaj Allianz Life Insurance, said, if a person buys an Ulip for investment point, they go for a low life cover multiples, which ranges from 5-15 times the annual cover. Those who look for extra humanity cover and at the same time also expect a certain quantity of money at the end of the term, go for high multiple life covers. He added “Unlike the general awareness, such policies are meant for retail customers and these are our bread and butter policies that are popular among our customers”.
Bajaj Allianz generally offers life cover in multiples of the term of the policy. However, some of its policies such as New Family Gain II and Unit Gain offer life cover up to 85 times the annual premium.
KS Gopal Krishnan, chief financial officer and appointed actuary, Aegon Religare, said, high multiple life cover products are made for retail investors, who have liabilities such as home loans, child’s education and marriage.
However, some experts believe Ulips are not the best options for higher life cover up to multiples of 50-60 times.
Rahul Agarwal, CEO, Optima Insurance brokers, said, when there are cheaper options available in terms plans, why would someone go for Ulips to get higher life cover? He added “People invest in Ulips because of the return on equity investments and if one opts for higher life cover, the investment section becomes limited and so do the returns.”
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