Best Ulips in the market to invest in
A good Ulip is the one, which costs less, gives good returns, provides
adequate life cover and has proper disclosure with respect to costs,
returns, etc. along with good servicing.
A good unit-linked insurance plan (Ulip) is the one, which costs less gives good returns, provides adequate life cover and has proper disclosure with respect to costs, returns, etc. along with good servicing. Our analysis revolved around the aforesaid parameters to rank the Ulips.
Unlike mutual funds that have a simpler cost structure, a Ulip carries a number of cost heads including charges related to administration, fund management, mortality, premium allocation, etc. Further, all these costs are levied in ways that do not lend themselves to standardisation.
Tip: How to choose the best Ulip to invest in
To overcome the confusion, we took a sample scenario (30-yearold male paying Rs 50,000 annual premium for a 10- year tenure) and took benefit illustrations from all insurers, wherever available.
Fund-Performance: Ideally, fund performance should have been considered for at least a year, but as we are analysing the products post September 2010, we had to curtail our time frame to past 6 months.
The complete Net Asset Values of past six months were obtained from the websites of respective companies and returns have been calculated thereon.
Since our time frame was less than a year, the absolute returns, instead of annualised returns, have been calculated.
Here, the CAGR formulae have been avoided as it would have amountedto monthly compounding, which would lead to technically wrong results.
To include fluctuation or risk volatility, we have included standard deviation.
The scores for volatility was assigned and clubbed with return scores to arrive at the total fund performances scores. To know that to maintain consistency, we have taken funds with highest equity allocation (minimum 60%).
Disclosures: We have judged the insurers' transparency level, i.e., the level to which the details of the policy are provided on the website or brochure, and how much they are in conformity with Irda's norms.
We have defined the following parameters to judge this aspects:
>>Availability of product brochures, premium calculators and business data such as financial statements with adherence to formats prescribed by Irda.
>>How detailed is the brochure or web-page: availability of sample mortality tables, rough illustrations, whether the illustration calculator is in adherence to Irda guidelines or not, etc.
Flexibility in life cover: Ulips are known to be more flexible in nature than their traditional counterparts, and on most counts, they are.
However, most insurance companies do not facilitate enough choices for individuals on life cover, limiting the suitability of a policy.
Usually, the sum assured relies on a multiplier fixed by the insurer.
Servicing: All the above-mentioned factors deal with pre-policy purchase period; but wouldn't you like to buy a Ulip which process the after-sales requests-surrender, maturity, death-related queries, etc., smoothly.
We analysed the total claim settlement ratio for past oneyear to see how a firm is performing on the servicing front.
-By Satkam Divya, Business Head, Rupeetalk.com
Unlike mutual funds that have a simpler cost structure, a Ulip carries a number of cost heads including charges related to administration, fund management, mortality, premium allocation, etc. Further, all these costs are levied in ways that do not lend themselves to standardisation.
Tip: How to choose the best Ulip to invest in
To overcome the confusion, we took a sample scenario (30-yearold male paying Rs 50,000 annual premium for a 10- year tenure) and took benefit illustrations from all insurers, wherever available.
Fund-Performance: Ideally, fund performance should have been considered for at least a year, but as we are analysing the products post September 2010, we had to curtail our time frame to past 6 months.
The complete Net Asset Values of past six months were obtained from the websites of respective companies and returns have been calculated thereon.
Upper Limits
Here, the CAGR formulae have been avoided as it would have amountedto monthly compounding, which would lead to technically wrong results.
To include fluctuation or risk volatility, we have included standard deviation.
The scores for volatility was assigned and clubbed with return scores to arrive at the total fund performances scores. To know that to maintain consistency, we have taken funds with highest equity allocation (minimum 60%).
Disclosures: We have judged the insurers' transparency level, i.e., the level to which the details of the policy are provided on the website or brochure, and how much they are in conformity with Irda's norms.
We have defined the following parameters to judge this aspects:
>>Availability of product brochures, premium calculators and business data such as financial statements with adherence to formats prescribed by Irda.
>>How detailed is the brochure or web-page: availability of sample mortality tables, rough illustrations, whether the illustration calculator is in adherence to Irda guidelines or not, etc.
Flexibility in life cover: Ulips are known to be more flexible in nature than their traditional counterparts, and on most counts, they are.
However, most insurance companies do not facilitate enough choices for individuals on life cover, limiting the suitability of a policy.
Usually, the sum assured relies on a multiplier fixed by the insurer.
Servicing: All the above-mentioned factors deal with pre-policy purchase period; but wouldn't you like to buy a Ulip which process the after-sales requests-surrender, maturity, death-related queries, etc., smoothly.
We analysed the total claim settlement ratio for past oneyear to see how a firm is performing on the servicing front.
-By Satkam Divya, Business Head, Rupeetalk.com
