Evolution of ULIPs

Many people plan investments and take insurance coverage separately. However, you may not have been aware that you can manage both with a single plan. With Unit Linked Insurance Plans or ULIPs, you can not only enjoy the benefits of life insurance but also make investments in the funds of your choice. Such plans have seen numerous changes over the years. Read on to learn more about this in the following sections.

Unit Linked Insurance Plans (ULIPs) are financial products that combine life insurance with investment options. Policyholders can invest in a variety of funds, such as stocks or bonds, and the returns are linked to the market’s performance. These plans offer flexibility, allowing individuals to switch between funds based on their risk appetite.

Apart from the dual benefits of insurance and investment, they also offers features such as shorter tenures, and tax benefits, among others.

The Indian investment market has been through many changes over the years. Just like any other investment instruments, ULIP plans have evolved over the past decade ever since their introduction.

 

At present, the ULIP plans available in the market are significantly better and come with several advanced features. Moreover, the structure of the policies have also undergone some major transformations. Let us have a close look at the evolution of ULIPs.

• Before 2010

Due to high front-load costs and other fees, ULIP Investment's popularity declined after it was introduced to the market. In addition, the scheme was misrepresented as a three-year savings plan to many individuals.

 

Customers received false information on the lock-in period, which stated that they would only be required to pay premiums for a maximum of three years. However, to get decent ULIP profits, investors need to invest in ULIP plans over the long term.

 

The popularity of ULIPs declined when investors realized that a large amount of the premiums paid went toward extra costs and that the net fund value was significantly lower.

• Between 2010 and 2015

The Insurance Regulatory and Development Authority of India (IRDAI) enforced certain rules after learning that ULIP plans were being missold nationwide and that investors had been cheated out of millions of Rupees. Stricter regulations were then implemented to increase investor returns.

 

As a result, in September 2010, the minimum protection coverage was raised to ten times the yearly premium paid, the lock-in period was extended to five years, and certain ULIP charges were capped.

• From 2015 onwards

In the year 2015, the charges associated with ULIP plans underwent significant changes. Providers started capping the mortality charges and fund management charges, making the product more appealing to the audience.

• ULIP Plans Today

Even though ULIP plans had a difficult start, they are now very popular because they provide substantial long-term returns. Now, the product is being designed to be more economical. Investors are beginning to make substantial investments in ULIPs as they have a clearer understanding of what they are. The wealth accumulated over time through ULIP plans can be utilized for long-term objectives like retirement planning in addition to the tax benefits associated with them.

The amount you invest in a ULIP plan is eligible for tax deductions under Section 80C of the Income Tax Act, 1961. The maximum amount deductible under it is ₹1.50 Lakh. Moreover, when the policy matures, the amount you receive is exempted from tax as well under Section 10 (10D).

Since there are several products available in the market, customers tend to make a wrong decision while selecting the right product for themselves. However, an excellent way of choosing the right ULIP Policy is through using a ULIP calculator. 

A ULIP calculator is an online tool that allows you to not only calculate the premium but also measure your returns. It provides an estimate of how much you can earn based on the premium amount. Moreover, you can compare several ULIP plans based on ULIP returns and premiums with it.

Over time, every investment contributes significantly to your portfolio, bringing you one step closer to your financial objectives. For this purpose, you can make use of Bajaj Allianz’s ULIP plans, since they are quite reliable and can help achieve your dual needs of insurance and weakth generation.

 

Moreover, with Bajaj Allianz ULIP plans such as Bajaj Allianz Future Gain and Bajaj Allianz Goal Assure, you can benefit from facilities such as partial withdrawal of funds, alter premium payment frequency, rider options, and more. 

 

Browse through the full range of ULIP plans at Bajaj Markets online and choose a policy that best suits your needs.