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Should IRDA cut ULIP charges more?

Created by : Niranjan Meena, Actuary Manager, LIC  | 07 29 2009 07:51:46 +0000
Industry : InsuranceFunctional Area : Pricing(Sales & Marketing)
Keywords : insurance life insurance ulip irda irda policy investment. customers
Activity:  691 views;  last activity : 07 06 2010 20:18:09 +0000

With a High cap on ULIP's some think, it is not at all beneficial for customers as the returns are very low. So the latest IRDA's decision to cut ULIP charges has given some respite for customers and also has made it more Transparent, but like they could have reduced even more to gain even more better penetration with Insurance sales, as there is very little literacy rate interms of Insurance in the country but then with so much reduction will it affect Insurance providers..So should IRDA cut ULIP charges more?

  
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I think this cut of around 500 basis point is good and has capped overall charges to 3% of the gross yield in case of Ulips with tenure of 10 years and this is a welcome move where ULIP's which are the most favouralbe investment option for investors and this will make product attractive and there is also increased returns.
By Niranjan Meena, Actuary Manager, LIC  07 29 2009 07:51:46 +0000
 
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My opinion is that the IRDA has reduced ULIP charges to its maximum. This change allows insurance companies to continue providing adequate protection to policyholders, which is the core objective of a life policy. Moreover, it allows companies to offer older customers the benefits of life insurance without crossing the cap. So lowering the charges beyond this may provide impetus to long-term policies.
By Rakesh Chakraborty, Sr. Associate, ING  09 30 2009 08:09:01 +0000
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This is a good step towards expenditure management and better transparency.

IRDA is working on the expense ratio and with many insurance companies yet to break even they are really worried about this, especially the long term . Also, this is favorable for the customers and is expected to attract more demand. Ulips are long term products and this will make them more attractive as an investment option.

 But on the other hand as far as insurance in India is concerned, it is always sold and never bought. so cost checks should also give due consideration to this aspect.

 

@ moderators of this community,

I have referred a debate “ growth style vs value style” accidently to this community. As it doesn’t come under insurance , kindly remove it from this community.

Thanks.
By Padmanabhan R, Articled / Audit assistant, Finance student  | 08 21 2009 18:41:27 +0000
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This is a welcoming step by IRDA. This will not only enhance trancepiracy into the products but also built confidance in investors. It will also have a positive effect on the returns.
By Puneet Chathley, State Training Manager, Punjab - TPD  | 08 06 2009 06:26:40 +0000
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Yes, IRDA should cut more ULIP charges. It will be beneficial for both insurance sellers and investors
By Vijay Kumar, Actuary Manager, LIC  | 07 29 2009 15:18:17 +0000
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Yes, definitely it will be beneficial to the investor as well as for the sales staff, and some will also find more lucrative than MF (Tax Saver).

 
By Sajju Sahu, Senior Manager, Windsor Petrochemicals Pvt. Ltd.  | 07 29 2009 13:49:12 +0000
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yes, Meenaji is absolutely rigt, it will make product more lucrative for investors as well as for th sales staff. Welcome step by IRDA.
By PARIMAL PURUSHOTTAM MADLANI, Risk Manager, SAUDI INDIAN COMPANY FOR COOPERATIVE INSURANCE  | 07 29 2009 11:41:09 +0000
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There are various combination as such ULIP is conserned. For 10 yr product its 3 % cap, i think its huge as far as ULIP@ 10 yrs concerned and whereas mortility charges are not apart of same. It must be not above 2% for 10 year term excluding mortality charges and for 20 yrs and more it can be 1% excluding mortality charges. Its ultimately give better competitive advantage than MF. etc
By Dushyant Hada, Territory Manager  | 09 29 2009 13:29:34 +0000
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