Friday, August 3, 2012

Linked Life Insurance Policy plans, Products In India - Insurance News of India

Here is latest Insurance News information on Linked Life Insurance Policy Plans, Products available in India

In the share stock market, the investor can know only profit returns or losses. But invested company will not inform the details of where that company reinvested the whole investment amount to all investors.

Even though investor knows where his investment money flowing and how his investment money making profitable returns to share market stock market broking companies, But they can not get or receive any additional benefits like life insurance policies, interest rates and other benefits from their investment.

Many Insurance companies have developed some plans and policies that are combine the benefits of life insurance as well providing some opportunities to participate in Indian shares Stock Market.

These policies and plans simply referred as Linked Life Insurance plans and policies.

In other words Unit Linked Insurance Plans, simply in short ULIPs.

What is ULIPs?

ULIPs are the plans that are provide both life insurance protection and investment (in Indian shares Stock Market/secure bonds…etc…)

In the ULIPs, the insurer or proposer offers to pay a certain sum towards premium.

In this linked policies, the Sum Assured may be conveyed as an integrated benefits on the happening of the event, the higher value of units in the fund will be paid.

As life cover lessens the value of the units rises. As the life risk cover drops, the premium adjusted towards the life cover will diminution and the amount allocated to investment will rise.  

ULIPs Features offered by insurers are variable to each company.

Even vary with each ULIP plans.

In the normal life insurance policies, the policy holder can’t pay additional premium towards the chosen insurance policy.

But in case of ULIPs, the policy holder can pay additional premium for investment at any time.

One of the best features is withdrawl at any time by policy holder.

In ULIPs, partial or total withdrawl is allowed. This is subjected to company rules and regulations, conditions and policy contact agreement.

These ULIPs policies will not be eligible for annual bonus except loyalty bonus that paid at the end of policy.

Options of Funds

Insurer companies suggest policyholders to choose the available options of funds to invest in many investment sources.

Equity Funds: These are referred as Growth funds,

In these types of funds, there would be more investments in equities which are shares and stocks trafficked in shares stock market India.

Bond Funds: These are referred as Debt Funds.

In these types of funds the investments are placed in security bonds. The investments deposited in Government guaranteed security bonds that have high rating) and safe debts also in high investment grade corporate bonds.

Liquid Funds: These are known as Money Market Funds.
  1. In these types of funds, the investment placed in treasury bills, commercial papers and others…
  2. These all funds are generally invested in various sources that have high rating, that provide more security against investments, fixed guarantee returns, shares, stocks…etc…
  3. All these ULIPs plans have different names and investment options vary from company to company.
  4. Cash-plus, Gilt, Magnifier, Income, Defensive, Conservative, Multiplier, Protector, Preserver, Secured and Dynamic…etc… names are used to distinguish between funds.
  5. Please don’t depend up on these names to choose investment option. But it is necessary to track the record of the fund to evaluate how well it is doing…
  6. Majority of insurer companies are allow policyholders to switch their invested money from one fund to another fund during the term policy under some conditions and rules…
  7. Unit Linked Insurance Plans are provide a lot of flexibility to the policyholders. Ex: Option of switching, additional investment in desired finds etc…
  8. To take advantage of the equity market conditions, the policyholders can be allowed to redirect the current premium into any choosing fund.


Lock-In Period:  
  1. Traditional savings allow us to withdrawal at any time of need or in case of emergency.
  2. Lock-in-period is that period during which withdrawal is not allowed at any time. After completion of this lock in period only, the surrender value is allowed.
  3. Here are three plans based on lock in period. They are 1year, 3 years, and 5 years.

Riders:
  1. Riders provide the additional benefits to insured or policy holders of traditional plans.
  2. The additional benefits are provided by riders are disability benefits, accidental benefits, critical illness rider, hospital cash benefits, major surgical assistance benefits…etc…
  3. Generally some additional premium amount has to pay to get these benefits.

 Charges:
  1. The charges in the ULIPs are subjected to various conditions and vary between insurer companies.
  2. Generally charges are collected in any one of these two ways. They are (a) deductions from premium (b) by cancelling some of units.
  3. The charges collected are as follows.

  • Accidental benefits charges
  • Insurance or risk cover charges
  • Service tax
  • Surrender charges
  • Fund switching charges
  • Fund administration charges
  • Flat fee
  • Fixed fee
  • Administration charges…etc……


ULIPs are differs from some traditional insurance plans.


The main differences are documents, switching funds option, lapse, revival conditions and claim settlement conditions.

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