ULIPs are in their good time as the equity market is displaying double digit return of 18% in the last fiscal.
Selling of ULIP plans does not satisfy the insurers. Now, the agents are catching young parents with the ULIP child plans.
In traditional child plans, the general duration is of 15 years whereas after the 5 year lock-in period of ULIPs, individuals with higher risk appetite can also invest for 3 terms in ULIPs. Along with insurance, ULIPs offer participation in equity markets. If any unfortunate event occurs, the nominee is offered the sum assured and the maturity amount is paid at the time of maturity whereas, the future premiums are waived off.
Premium paid in child ULIPS can be used by policyholder in a SIP or a dynamic fund allocation. And, the premium paid in traditional child plans is generally invested for corpus creation and guarantee payouts in government securities. Senior director and COO of Max Life Insurance, V Viswanand said investing at varied market cycles i.e. paying regular premium for a long term reduces the risk. S Sridharan of FundsIndia informed that interest rates on FDs have been 7.3% on a average in the past 13 years whereas, a traditional child plan offers 6% return.
Insureres are trying to grab more number of customers. Like- Shiksha Plus Super ULIP is launched by MaxLife for school fee support. Viswanand said, this plan further offers 10% of the sum assured along with the lumpsum benefit in case of demise of the parent. And yearly education expenses are taken care by offering maximum 10 and minimum 3 such installments.
Tarun Chugh, MD & CEO, PNB MetLife informed that the 3-4% of their product portfolio constitutes of child-linked plans. The positive outcome from the market and stable government has grown interest in ULIPs.
Child ULIPs are also offered by HDFC Life and ICICI Prudential. These plans are an important growth driver.