After the much publicized tag of war between SEBI and IRDA, ULIPs are now having a make-over.

Here are some of the necessary factors, IRDA is to modify in ULIPs:

Initial charges: Premium paid by investors in ULIPs is partly used for insurance and partly for making investments. However, for the first 2 -3 years of the term of the policy, insurance companies charged heavily.

Sometimes insurance companies diverted as much as 80 percent of the premium payments towards these charges.

Initial charges are basically used for administration charges, processing fees etc. Therefore the charges should be extremely low.

Facility to surrender policy: Sometimes policyholders need immediate funds, and then they opt to surrender their policy. But the problem is, the long term consequences of surrendering the policy early had an adverse impact on the policyholder’s investments.

The surrender charges on policy were high. Some companies confiscated up to 60 per cent of the policy value in case the policyholder surrendered his policy.

ULIPs give back most when it’s invested as long term basis. Hence early withdrawal should be discouraged.

Now, if you want to understand the nuances of different types of policies and its price, feel free to seek the help of InsuranceMall to select the right products based on your need.

InsuranceMall is the leading and first online insurance broker in India. With the motto to make our customer delighted and proud about their decisions, we’re always there to help them with best possible policy.

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