The changing face of ULIPs
In the recent past Unit Linked Insurance Plan (ULIPs) has become a favorite among investors. In many ways, it gains preference over other traditional insurance products. Today the choices have changed and insurers catering to large masses of people know the expectations have also grown by leaps and bounds over the years. So to say, investors no longer want to have plain vanilla insurance protection. If it is topped with stock market element, the customer couldn’t get a better bargain.
ULIPs have equity flavour along with financial protection to it. Today investors have widened their scope and want to extract maximum from their investment products. What better choice then having a ULIP product in your investment portfolio. With your single investment product you get the best of both insurance and market-linked products.

The outstanding performance of stock market has been beyond the normal expectations to the extent that it has triggered the attention of the common man even to the ones who are completely alien to it. Today more and more people are taking an interest in stocks and want to be a part of the booming market in some form or the other. However, it is advisable not to follow the crowd unreasonably. Only after knowing your risk appetite and having analysed your needs, take the plunge into it. Any thoughtless action can lead you to financial losses.

Lets understand the basic concept of ULIPs. Simply put, ULIPs are life insurance plans with a dash of equity touch to it. In other words, a portion of the corpus (the premium) paid by you is invested in equities. The working of ULIPs funds is similar to that of mutual funds. The fund management charges are deducted from the premiums paid by the investor. The management charges get minimized with the succession of each year.

ULIPs offer more choice to investors in terms of funds. The policyholder can choose the funds in which they want to invest. For example if you were to buy LIC’s ‘Jeevan Plus’, one gets to invest in one of the 4 funds namely, Secured fund, Growth fund, Bond fund or Balanced fund. Depending on the level of returns or the risk, you can choose the funds. High returns involve higher risks. However the percentage of investments in equities differs across the insurance companies.

Looking at the way ULIPs were sold, Insurance Regulatory and Development Authority (IRDA) showed its concern by introducing new norms for it. IRDA tried to prevent ULIPs from running on the lines of mutual funds by imposing a minimum three-year lock in period. The insurance regulator rightly justified that an insurance product’s basic function is to provide financial protection.

Here it becomes important to mention that options available today vary a lot like it never did in the past. ULIPs were something that never entered insurance market until private insurers made their presence in the Indian insurance sector. And today we have an insurance industry, which is more dynamic in nature perhaps with more choices to be expected in future.

Investments in stocks have a positive as well as a negative side to it. No doubt with risky investment options like ULIPs, mutual funds, etc. the returns are attractive but you can minimize the financial losses to a greater extent with a careful study of the market. A small precaution can help you go a long way. After all everyone wants his or her nest egg to grow.
 TOP     
 
Have you planned for your retirement years ?
‘Retirement’ is best described as the time when you want to truly relax. Quality time spent just unwinding where you don’t have to hurry to go anywhere. A time that you get to spent completely by yourself and with your beloved. You can use your retirement years to catch up with things for which you did not get time in the hustle and bustle of life.
Let your retirement years be the best years of your life. For these years to be best and blissful, you have to plan for it. To live your dreams, you have to work towards to it. Not many would think of planning for retirement at a young age because the fear of growing old creeps in. A wrong notion persists, where planning for retirement is associated with growing old. Infact, a very low percentage of people have made old age planning be it in the most minor form.

However, the government has given wings to retirement planning by raising the tax exemption limit upto Rs 1 lakh. With the Budget 2006-’07, the ceiling has moved up to Rs 1 lakh from Rs 10,000. This gives you a wider choice to invest and avail the tax benefits at the same time. This decision by the government will certainly encourage long-term investment.

There are a few pension plans that Life Insurance Corporation of India (LIC) offers, Jeevan Nidhi, New Jeevan Surabhi-I. There are other options like annuity plans as well. LIC recently launched a new policy, Jeevan Akshay IV, an annuity plan. ‘Annuity’ is a regular amount received for the defined term decided by the policyholder. This plan is a provision for retirement in which the policyholder initially pays a lumpsum amount and the insurer pays back annually or in the form of monthly installments to the policyholder after the stipulated time.

The aforementioned plans are the ones that specifically target retirement. You do have other options like endowment polices with tenure of 20-25 years. For example, a 35 year old male has bought an endowment policy and will mature say after 25 years, the maturity amount that he will receive can be treated as retirement savings.

If you are in a fix and are finding it difficult to make decisions, take the help of your insurance advisor who would be able to guide you on this. Another tip would be to draft a financial plan and keep revising it regularly. Needs, demands change with changing times and hence you would need to alter it accordingly. If you have already made your retirement provisions, make sure that this reserve remains untouched because during financial crisis there is a strong likelihood of using this reserve.

For your retirement years to be the golden years of life, get started with right planning for it.
 TOP    
LIC’s new launch- Jeevan Tarang

The insurance mammoth, Life Insurance Corporation of India (LIC) has added two more products in its kitty with the launch of ‘Jeevan Tarang’ and ‘Jeevan Akshay-IV’.

Jeevan Tarang is a combination of Whole life and Moneyback plan. The policy provides for annual survival benefit at a rate of 5.5% of the Sum Assured for lifetime after the chosen Accumulation Period.

The accumulation period can be termed here as the premium paying term, which is for 10, 15 and 20 years. During the accumulation period, the policy accrues bonus. The life cover is available upto age 100.

Under this policy, the survival benefits are paid at the end of the selected accumulation period. It also includes the bonus amount. After the completion of the accumulation period, 5.5% of the sum assured is payable every year for lifetime. As maturity benefit, the sum assured along with loyalty addition, if any, is payable on survival of the life assured to the policy anniversary coinciding with or immediately following the completion of 100 years of age.

On the death of the policyholder during the accumulation period, sum assured, along with bonus is paid to the nominee. The policy also offers four different types of riders for extra protection.

The maximum age of entry is 60 years for this policy. The minimum sum assured is Rs 1 lakh and there is no limit on maximum sum assured. The policy offers premium payment flexibility too. The individual can pay premium on a single, yearly, half yearly, quarterly, monthly basis. It can also be paid through salary saving scheme. You can even avail of loan against this policy.
 TOP    

Please do not reply back to this mail. This is sent from an unattended mail box.
Please mark all your queries / responses to webmaster@insuregain.com



HOME