Investment: Smart way of buying Ulips

Consumers have always been sold Ulips as investment plans, which offer a money minting proposition. The truth is, all of these things told to us by our so called financial service advisors and planners as insurance companies prefer to call them are completely fake and baseless.

Since the past couple of years, the insurance industry regulator Irda has been coming up with regular guidelines that have helped consumers immensely. One of such initiative was introduced in September 2010, where the commission on ULIPs was drastically reduced, making them a good investment option. And this is around the time when agent's stopped selling Ulips and picked up traditional plan, which are a non effective corpus building plan for the consumer.

Due to this dramatic change in the scenario, insurers were forced to offer Ulips which were low on cost and high on returns (since majority premium was invested in markets) to the consumers through an alternate means of distribution, ie, online. But considering the risky nature of a Ulip investment, the consumers found themselves lost in a maze of products, all of which stated that they were the best for them. If I look at the market today, there are four major types of Ulips available:

a.Standard Ulips with allocation charges sold by agents

b.Ulip Nav which could be bought online with low or 0 per cent allocation and other charges. Because of low distributon margin, distribution channels don't push these products.

c.Ulips which offered capital guarantee, i.e., they assured the policyholder to return the capital invested by him, less of any charges

d. Ulips with highest NAV guarantee, ie, the companies would calculate the maturity returns basis the highest NAV recorded a certain set of time as declared in the policy

Within this four types there are about 500 odd ULIPs and for a customer to choose a better one could be a daunting task. Here are a few steps which could help you:

[source: http://archive.indianexpress.com/news/investment-smart-way-of-buying-ulips/1003408/]

Under The Ulip Shade

When did you last receive a call from a telemarketer selling a unit-linked insurance plan ? It must have been a while now.

Ulips, which not long ago were the darling of insurance brokers, have fallen out of favour among intermediaries after the new norms for the product came into effect from September 1, 2010.

It is no longer as lucrative for brokers to sell Ulips after the Insurance Regulatory and Development Authority (Irda) placed severe restrictions on upfront commissions and charges, which prior to the new norms at times shaved off the entire first year premium paid by a policyholder.

Often investors had to wait for years to recover their initial investment. Under the new norms, Ulips are now clearly structured to favour the consumer. With far less being deducted from the premia compared to pre-September 2010, more is invested, thereby holding out potential for higher returns. The regulator has also stipulated higher minimum insurance covers on Ulip while they have been positioned as longterm products with longer lock-in stipulations.

So are you thinking of setting aside some of your money for purchasing Ulips? With brokers not willing to reach out to you to push the products and explain their features, you might find it difficult to decide on which one to settle for. We lend you a helping hand. In the following pages we provide you a comprehensive guide on how to look at Ulips.

With their present structure, Ulips could be good investments, provided you are willing to take a longterm call.

[source: http://businesstoday.intoday.in/story/new-irda-rules-on-ulips-to-favour-investors/1/16580.html]

Is ULIP the link that connects your present with a secured future?

Life Insurance is one of the better ways to ensure that you provide a financial backup in case of a loss of life or to get a good return on investment in case you survive the insured period. Another good way to beat inflation is to invest regularly so that you earn as the markets rise. But the best way to ensure that you have both the things in hand - a life insurance and a good investment in the market will be opting for a good Unit Linked Insurance Plan (ULIP). Yes, Best ULIP Insurance Policy not only covers your life risk but also invests your savings in good shares at regular intervals. The best feature of such a policy is that it ensures that your money is invested without you having to bother about it. In ULIP the amount earned is received by the insured at the end of the term of maturity. In an event of death of the insured the amounts earned shall be paid to the beneficiary.

Thus, Unit-linked insurance plan or Best ULIP Insurance Policy is an investment vehicle that offers dual benefit that is life cover and investment. The premium paid under ULIP is divided into two parts, where the first part goes toward cost of life cover, and the other is invested in funds. An investor has the option to choose from equity, debt or hybrid funds, where their premium will be directed. In India most ULIPs are life insurance plans where the cash value of the policy varies. This variation is due to the fact that the cash value is the net asset value of the investments made. Such a plan not only gives protection but also gives flexibility in investment.

In case a client goes for an accidental permanent and total disability benefit plan, in such event the sum is paid to the assured in installments. Similarly if a critical illness option is taken, in an event of diagnose of such an illness the sum is paid on completion of certain conditions.

Most of the companies allow a free look for a period within which you can cancel the policy. Such a cancellation does not attract any penalty. However the dues related to the cover are already informed and any such related expenses will be deducted.

Government Efforts

Apparently, Insurance Regulatory and Development Authority of India (IRDAI) have taken suitable measures to clearly structure the Best ULIP Insurance Policy so as to make them more customer friendly. High agent commissions and charges were capped, after which ULIPs became more attractive to the customers. If someone is willing to remain invested for a longer term then ULIPs could be plan that you should be looking out for.

Financial Experts View

Previously, financial experts felt separating out the life cover objective with investment is a good option. But, ULIP investments are one such plan which helps to accomplish the two goals together and therefore has been the top recommendations by most of the financial gurus as the best investment strategies of the modern times. Ideally, a ULIP held for more than 10 years could return higher profits over the period of time.

Best ULIP Insurance Policy investors have a choice of paying a lump-sum amount or premium payments. Another benefit is that ULIPs give an edge over other investments in the tax benefit. ULIPs are qualified for deductions under Section 80C of the Income Tax Act.

For someone who wishes to safe and have a secured future, ULIP is one of the best instruments available. It not only induces to save regularly it also gets you into a habit of investing small amount regularly. Moreover it gives you coverage for life as well as builds your wealth as time moves ahead. With technology at its par, one can always get the information of ULIP policies on an insurance company's west site, and choose the option of buying the best Best ULIP Insurance Policy plan online. 

Under The Best Ulip Insurance Policy Shade

Best Ulip Insurance Policy, which not long ago were the darling of insurance brokers, have fallen out of favour among intermediaries after the new norms for the product came into effect from September 1, 2010.

It is no longer as lucrative for brokers to sell best Ulip insurance policy after the Insurance Regulatory and Development Authority (Irda) placed severe restrictions on upfront commissions and charges, which prior to the new norms at times shaved off the entire first year premium paid by a policyholder.

Often investors had to wait for years to recover their initial investment. Under the new norms, Ulip insurance policy are now clearly structured to favour the consumer. With far less being deducted from the premia compared to pre-September 2010, more is invested, thereby holding out potential for higher returns. The regulator has also stipulated higher minimum insurance covers on Ulips while they have been positioned as long term products with longer lock-in stipulations.

So are you thinking of setting aside some of your money for purchasing Best Ulip Insurance Policy? With brokers not willing to reach out to you to push the products and explain their features, you might find it difficult to decide on which one to settle for. We lend you a helping hand. In the following pages we provide you a comprehensive guide on how to look at Ulips.

With their present structure, Ulips could be good investments, provided you are willing to take a long term call.

[source: http://businesstoday.intoday.in/story/new-irda-rules-on-ulips-to-favour-investors/1/16580.html]

Six things Ulip investors should keep in mind

Ulips allow investors to change the investment mix of their plans. You can change exposure to equities if you think the market is favourable. Of the estimated five million Ulip policyholders, barely 20 per cent know about the switching facility and less than 5% actually use it. This is a pity as it gives Ulips an edge over mutual funds. If you don't use it, you may be losing out on a major benefit.

WHEN TO USE IT

The switching decision will depend on a number of factors, including the individual's own perception of the market and his or her risk profile. The market level is a good trigger. You could choose to tweak your asset allocation with every 10 per cent change. A mix of disciplined asset allocation and deft switching can yield good results for the proactive policyholder.

WHAT IS THE COST?

The switching facility is free. Earlier, there was a limit on the number of free switches in a year, but now most Ulips allow unlimited switching. You can do it by accessing your policy online. Just log on to the insurance company's website and change the investment mix as desired. Alternatively, you can fill up a switch request form and submit it to the insurance company.

VALUE AS TRIGGER

Sophisticated investors can link switching decisions to the PE (price to earnings) ratio of the index. It is derived by dividing the index level by earnings per share (EPS). The Nifty EPS in April-June 2014-15 was Rs. 376. When the Nifty was at 8,040 on 15 September, the PE was 21.38, a little above its long-term average of 18.5. The EPS changes as companies declare their quarterly results.

TAX EFFICIENCY

The best part about switching asset allocation of your best Ulip insurance policy  is that it does not have any tax implication. Since these are insurance products, any long-term or short-term gains from the transaction are tax-free. In amutual fund, only long-term gains from equity funds and equity-oriented balanced funds are tax-free. All other gains are taxable. Short-term gains from equity funds are taxed at 15 per cent.

 [source: http://articles.economictimes.indiatimes.com/2014-09-22/news/54199081_1_asset-allocation-equity-funds-pe]

How Ulip scores over others as a better investment product

What's in it for you

Unit-linked insurance plans (Ulips) are a category of goal-based financial solutions that offer dual benefits of protection and investment. Your unit-linked insurance plan is linked to the capital market and offers you flexibility to invest in equity or debt funds depending upon your risk appetite.

Ulips are typically bought for long-term capital gains and offer a protection cover too. Though much has been written about Ulips in the past, a lot has changed for the better in the past four years. In 2010, insurance regulator Irda issued new guidelines for Ulips to improve the returns for investors by reducing the charges and to ensure that the new product is sold and bought as a long-term protection and savings tool.

In the last few years, the demand for traditional insurance plans has gone up considerably overshadowing the Ulips. So what is the new Ulip all about and what’s in it for you as a customer.

What makes Ulip a better investment product? 

First of all, it can help customers avoid everyday hassles of managing stocks: Investing in Ulip provides you expertise in fund management, multiple options to choose a fund on which the premiums will be invested and different investment strategies like, for instance, opportunist and balanced approaches.

Secondly, a Ulip can help you to churn your portfolio. It allows you to shift your money from one fund to another without disturbing your long-term financial plan by using fund switch, premium redirection or partial withdrawal options.

In fund switching, you can shift your money from equity funds to debt funds or vice-versa while the premium pedirection strategy allows you to redirect future premiums to any fund of your choice while keeping your existing fund composition intact. The partial withdrawal option in a best Ulip insurance policy provides the flexibility to its policyholders to ‘partially’ pull out some amount of money from the accumulated fund value within the policy term.

Other unique features of an Ulip include the duel benefits of investment and insurance cover, multiple investment options and tax benefits.

Ulip is a two-in-one plan, giving the investor twin benefits of life insurance cover and investment. The multiple investment options of an Ulip allow investors to invest in multiple fund options based on lifestage needs and risk profiles. Plus, investments made in a Ulip enjoy tax benefits under Section 80C & 10(10D) as per prevailing tax laws.

While investing in Ulips, an investor should keep in mind the charges applicable, the payment policy in case of premature surrender, the investment options offered, limitations and exclusions mentioned in the policy document, lapsing and its consequences, various disclosures required and also the various benefits offered.

[source: http://www.mydigitalfc.com/insurance/how-ulip-scores-over-others-better-investment-product-699]