In the world of evolution, only change is constant. If we look around, we will realize that everything around us has evolved over a time period. Remember, how our parents used to enjoy their favorite TV shows over a black & white television. And now, the current generation has OLED TV screen with numerous features.
The same is applicable with ULIP plan as well. Since its launch his financial product has come a long way. Let’s understand it in a more elucidate manner.
Unit-Linked Insurance Plan (ULIP) is an insurance policy which gives an opportunity to get dual benefit of insurance cover and investment plan in one scheme. With the investments being in debts and equity funds, a ULIP helps an insured to create considerable wealth over a period of time.
ULIP Returns and ULIP charges- Changes over time
Since its inception, ULIPs have undergone a major regulatory change in terms of ULIP charges. This happened when the Insurance Regulatory and Development Authority of India (IRDAI) decided to form a set of necessary biding guidelines. To reduce the ULIP charge burden on the customer, the Authority also brought down the charges. The new guidelines also set the lock-in period of 5 years for all ULIP plans. This lock in period helped inculcating a habit of disciplined and long term investment approach among investors and simultaneously led to wealth creation.
The new-age ULIPs
Today, of the multiple investment options available in the market, the new-age ULIPs are one of its-kind. These plans can help achieve key life goals as it offers individuals the opportunity to select a product in harmony with their risk appetite.
There are also flexibility to choose between funds, the charges are low and transparent and policy holders can avail tax benefit.
Since historically it is observed that long term market investments tends to yield attractive returns in the long run, the new-age ULIPs are one of the preferred option for those who would like to invest in a long term goal, like their child’s higher education abroad, worry free retirement etc. Hence by committing to new-age ULIPs, one can assume that their life goal will be accomplished over time.
Amongst the new-age ULIPs, Bajaj Allianz Life Goal Assure is a game changer for the industry as it has two unique benefits –Return of life cover charges which guarantees that a policyholder will get back the mortality charges deducted during the Policy term, thus enhancing the value of their corpus on maturity and the Return Enhancer which ensures that a customer who opts to receive the maturity benefit in installments over a period of five years will receive an addition of 0.5% hike up on each installment.
In addition to these features, the product also offers value packed benefits like Fund Booster and Loyalty Additions. Fund Booster is paid at maturity for staying invested provided the policy term is 10 years or more. Loyalty Additions are applicable for annualized premium of INR 5 lakh or more and with a policy term of 10 years or more. There are also other features such as option to choose from 4 investment portfolio strategies, option to decrease Sum Assured, change Premium Payment Term, and unlimited free switches between funds for customers. To further enhance the value packed benefits, customers can also avail tax benefits under section 80C and 10(10D) of Income tax Act 1961 subject to provisions stated therein.
ULIP has come a long way since its inception. With low ULIP charges and high ULIP returns, they stand second to none when invested wisely. As ULIPs are market-linked investment plans and deal directly with equity and debts funds, they are considered as one of the preferred ways for capital creation and life coverage.