Over the last few years, keeping in mind the customer's feedback and needs, the regulator and the life insurance industry have helped ULIPs evolve considerably to provide more benefits to customers.
The regulator has capped most of the ULIP charges making new-age ULIPs more cost-effective than what they were before. This has helped the industry bring out newer ULIPs that offer investor-friendly features like zero premium allocation charge. Another unique feature offered by the new-age ULIPs is the Return of Mortality Charges, which was never heard of before and is a revolutionary step in the industry.
What is Mortality Charge?
When a policyholder purchases a life insurance policy, he/she pays a premium to the insurance company to get a life cover. A part of this premium is deducted towards premium allocation charges (if any), and the remaining premium gets invested in the funds chosen by the policyholder. From this amount, other charges like, policy administration charges, and mortality charges, are deducted. The mortality charges deducted by the insurer are for providing the life cover under the policy.
Mortality Charge depends on factors such as age, amount of coverage (sum assured) of the policyholder, gender, policy term, smoking habits, health factors, etc and is deducted on a monthly basis by cancellation of units. For instance, a 30-year old healthy male buys a Bajaj Allianz Life Goal Assure with a sum assured of ` 1 crore, for a 20year term and he pays a yearly premium of ` 10 lakhs for 20 years. His total mortality cost deducted over the policy term would be approximately ` 33,000.
The new-age ULIPs are now returning back this mortality charge to the policyholder on maturity of the policy.
Return of Mortality Charges (RoMC) - A Revolutionary feature in New-age ULIPs
To enhance the benefits of ULIPs for the customers, Bajaj Allianz Life Insurance pioneered the idea of returning back the mortality charges to the policyholders on maturity. This feature has been introduced in its new-age ULIPs Bajaj Allianz Life Goal Assure and Bajaj Allianz Life Goal Based Savings (excluding single premium policy). Under the RoMC feature, the total amount of mortality charges deducted till maturity to provide life cover throughout the policy term is added back to the fund value at the end of the policy term.
This is an innovative and a pioneering step in the Indian ULIPs category and is aimed at enabling customers to enjoy the benefits of investing and also enhance their fund value on maturity. Thus, policyholders get to realize their life goals on maturity of policy, and also enjoy the little extra amount that is added back to their fund value.
The Return of Mortality Charge feature makes new-age ULIPs more lucrative and gives another reason to the retail investors to invest for their Life Goals through ULIPs.