What is perhaps the most important document that should be considered before making a Unit Linked Insurance Plan (ULIP) purchase is also the most overlooked – a benefit illustration.It is mandatory for an insurance company or its licensed intermediary to generate and explain in detail an illustration of the unit linked product being sold to a customer. More importantly, every policy sold needs to have its benefit illustration signed by the customer as part of the proposal form documentation. This guideline was put in place by the Insurance Regulatory and Development Authority (IRDA) to ensure that customers get a detailed understanding of the product, its cost structures and benefits before taking a policy. [More]

Unit Linked Plans, or ULIPs, combine protection with investments which are similar in structure to mutual funds. On the death of the life insured, the ULIP plan will provide for the payment of the higher of the sum assured or the fund value of the policy, to the policyholders nominees or next of kin. In the event of maturity of the policy, the ULIP plan will return the fund value to the policyholder. Unit Linked Funds are free to set their own asset allocation and available across the risk-return spectrum including debt funds, balanced, equity funds and index funds. A policy holder thus has far greater control over where his premiums are invested.

Since the benefits under a ULIP are twofold i.e. the protection and savings elements, the charges levied in a ULIP can broadly be associated with these two. [More]

Why does a life insurance policy lapse? What options does a policy holder have? Know more about lapses, grace periods, policy revival and withdrawal [More]

A review of the impact of regulatory changes to ULIPs effective September 2010 [More]

IRDA is now reportedly looking at making a second round of changes to products (source: media reports) – this time for traditional or non-unit linked products such as endowments, term insurance and money-back plans. This move is targeted at the benefit of customers and so that they are not mis-sold policies and that they take only the amount of risk that they can bear. [More]

IRDA has issued new guidelines for ULIPs which are a boon for the customers, but only if they make right use of it. The among many other important benefits for the customers, one is omission of mediators, thus direct or “online” purchase is going to be encouraged and you will know what your are buying out of the various options. [More]

IRDA will likely continue to amend the structure for ULIPs to deal with issues raised so far and bring clarity with the new law which will be good for the overall financial services. The changes (some already implemented and others proposed) include compulsory life covers, increased policy term to 5 years, cap on charges, disclosure on commissions received by intermediaries and reduced surrender charges are all beneficial to the customer. [More]