ULIP .. whether an Insurance or an Investment product ?

Frankly ... confused. Perhaps subscribers have been misleaded so long. Your un-biased and 'interest-free' openion counts.

--------- Latest : This debate may go on never to end. Arguments are placed / will be submitted. Some might have 'interest' and some are just academic here.

My expectation : ....   " ULIPs should be converted into a product that has an investment component that has similar rules and regulations to mutual funds, in combination with an life-cover component that has the same pricing as term insurance. If this happens, then I'm sure that every opponent of ULIP wil be happy ..... " quoted from an expert. Dont know whether he/she has any 'interest' in saying this.

Latest ... (II) : IRDA proposaes changes in ULIPs : effective lst July'10

--  the policy will have minimum tenure of 5 yrs ( & lock ),

--  all policies would have 'Insurance Clause', baring Helth Ulips

--  No loan against ULIP Policies

--  Top-up preminum will also have Insurance clause, Lock 3 yrs.

For all Insurace Cos : they are to inform prospective customers about the "Commission Payable to Agents" in advance

ULIP - Unit Linked Insurance Plans.  I am surprised that the debates provided by the best in the industry does not match the requirements of the question asked.  With all due respect to all the debaters on this, I wish to put forward simple facts of ULIP. 

Basic understanding is that IRDA controls all the Insurance and linked products by its rules and regulations and SEBI has no role to play in Life Insurance sector.  After traditional products, ULIPS were introduced into the market in the year 2001, when the private sectors were opened up.  Since then, ULIPS have undergone many changes and took to the market. 

Here in ULIPs the investor has a life coverage and investment also.  Out of the money invested, a part of it goes into Life cover and the rest of the money is invested in the market by the Fund Manager.  The designing and promotion of Life Indurance products is purely regulated by the rules and regulations of IRDA and there is no second thought about it.

Now coming to SEBI - Securities and Exchange Board of India, established in 1991, regulates and formulates the investment ie., stock exchanges, AMCs etc.,

I understand that everyone who writes a line in this forum is highly knowledgble and experienced.  Let us all keep the facts and debating to the basics and take it to next level of understanding.  Knowledge display is good, but it is waste of time and space if proper information is not shared.

Ulip plan is under control of IRDA.

World over, all Insurance plans, conventional or market linked or any other innovative product....they are regulated by the Insurance Regulators!!! When there is an insurance concept coming into picture, it should be the Insurance Regulator.

However, there is definitely a point on the other side of the argument. There are certain solutions:

1. The product features of ULIPs, the way they are sold, the way the product is monitored & controlled.....everything should go through a drastic change.

2. First of all, IRDA should take steps to see that these products are sold as Isnusrance plans...not only that, it should be percieved by the public at large as insurance plans. This will come about by bringing in fundamental changes in the product. The insurance component, the lock in periods, the charge structures, etc.

3. More importantly, steps should be taken to monitor the fund/fund manager's performance. Probably, possibility of this function being outsourced or somthing similar to that should be worked out. Nothing wrong in having a collaborative approach with SEBI. Innovative approaches by the two Regulators is also needed.

4. Another important factor is the commission structure. As every one accepts, this factor has forced SEBI to take this stand.

5. One big question is: What did IRDA do to promote ULIPs as Insurance Plans? I don't think it has done any job in this direction.

6. Finally, is the approach of both the regulators in coming into a public fight right? Was there no solution? Lots of lessons need to be learnt by the regulators from the corporates too.....

Gupta,

we see so many new entrants in mutual funds also, do we have to ban them because they dont have experience??

On charges part everything is open in IRDA benefit illustration,, customers should be cautious in choosing a scheme and bind with a good advisor.

Sachin

Then you should say endownment plans also as investment or savings product rather than insurance. do u?

Meena,

you are right. but the problem is its the most mis understood product and mis sold.

WHEN IRDA IS EXCLUSIVELY FLOATED TO CONTROL INSURANCE RELATED ACTIVITIES NO ONE NEED TO INTERRUPT.LET THE GOVT DEMARCATE THE RESPONSIBILITIES AND DELEGATE REQUIRED AUTHORITY INSTEAD OF ALLOWING OTHERS TO INTERRUPT WHICH CREATES A SENSE OF FEAR IN THE MINDS OF INVESTING PUBLIC SINCE THERE IS NO UNITY IN DIRECTION.

Yes it is the domain of IRDA. Since the 'with profit' endowment policy of the insurance companies are in the purview of IRDA. And nobody questions the authority of IRDA in that regard than why and from where does the question arise that ULIPS are not the sole domain of IRDA. ULIPS functions just as the 'with profit' endowment plan of the insurance companies. Difference being the percentage of funds allocated to share market investments. In the endowment plans the returns are less that is why no eyebrow is raised. In the ULIPS the return are quiet higher that is why everybody wants to have the share of the booty.

Thanks for the referral Mr. Asoke Kusari Ji.

I will support you since IRDA control is best, the reason is no fluctuation and assured return.