It is a strange choice considering that term life is the best insurance. The ULIP comparator can be expanded by IRDA to bring in more value. This is launched just after stringent guidelines for web aggregators which will drive them out of business
The Insurance Regulatory and Development Authority (IRDA) has launched its mobile compatible website www.m.irda.gov.in . This is not a mobile application as widely professed. The mobile compatible website can be accessed by any device with internet connectivity to check and compare features of Unit Linked Insurance Policies (ULIPs) introduced on or after September 2010. While the IRDA ULIP comparator is a good initiative, it is a bizarre choice considering that term life insurance is the best insurance. Giving a proper term life comparison is of utmost importance as there is three times variation in the premium rates from low to high end even for the vanilla product. Moreover, web aggregators like PolicyBazaar.com and MyinsuranceClub.com are reeling under the tough guidelines which can potentially drive them out of business.
What the ULIP comparator offers –
What it does not offer –
IRDA needs to bring more transparency in ULIP comparator for mortality charges, fund performance, actual returns on investment. Mutual fund performance is transparent as the number of ‘units’ are not subject to manipulation due to charges. The existing form of the ULIP comparator is a good start, but not enough for a savvy investor to make an investment or insurance decision.
The insurance regulator needs to bring out a term life insurance comparator with details of not just premium comparison, but also settlement, pending and rejection ratio of each insurance company.
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Also remember IRDA about a year ago had issued ads in prominent newspapers extolling the virtues of ULIPs!
-the point is that the units are reduced and hence a moving target. The average customer does not know how much mortality charges are eating the units along with policy admin charge. I have not found single customer who can put down a number of units he/she will have after one month (even if it is pure maths)
-Insurance companies do give NAV (read the article), but that has no relation to the actual performance for the simple reason that units are not a constant number. The NAV may have moved by 10%, but your actual return may be only 2% (assuming remaining 8% is eaten by mortality, premium allocation & policy admin).
Only Moneylife can write the truth and expose the reality of ULIP (rather than giving ULIP awards as done by some other publications). The reality is always bitter.
I guess you have not subscribed to Moneylife magazine till now.
LIC's Bima Plus is 10 years old.
However there is a product from UTI called UTI ULIP which has been in existence since 1971 and has given VERY GOOD RETURNS but it is different from Insurance Co. ULIP'S since the charges are really LOW, almost nothing.
Regarding your mention of Whole life ULIP it is a product which is really not required because a term Plan and a Good MF combination creates a large fund for you so that you actually do not require cover after 75, although the point is well taken that it is an individual choice and there is no single solution for all.
Good to see a healthy debate going on.
What you have read is my reply to Sumit. I am clearly of the opinion that MORTALITY CHARGES across all types of plans SHOULD BE SAME irrespective of they being charged under ULIP, TRADITIONAL, OR TERM. That will make ULIPS better than they now are. They should have higher cover offered and still lower charges for them to become SO CALLED BENEFICIAL IN THE LONG TERM LONG TERM PRODUCTS. With the kind of charges built into ULIPS even now there is no doubt that a term plan along with a good MF
scheme will give far superior returns in the LONG TERM, the only caveat being that the MF scheme should continue as "investors" have the habit of stopping their contributions to MF schemes when the markets are down!
When they declare settlement, rejection and pending ratio, it is across all the products. How can you say that the ratio are bad for online term plan. Someone can argue that it is for ULIP too. The companies offering online term also offer ULIP. If you have these ratio exclusively for online term plan for all the companies, please send it to us. We will be happy to share it with our readers.
Many of the new insurers have handful of death claims. There is early death claim investigation too. If 2 out of 5 early death claims are rejected, the rejection ratio you see is 40%. You don't see the absolute numbers.