life insurance axa
UNIT LINKED INSURANCE PLANS
Unit-linked insurance plans, ULIPs, are distinct from more familiar with the policies benefits "sold for decades by the Life Insurance Corporation." With profits policies are called 'for investment because earnings (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing protection insurance against death and provision of long-term savings, but are structured differently.
"With profits policies," the company credit insurance premiums to a common fund called "Fund for life" after setting aside funds for the risk premium life insurance and management costs. Each year, the insurance company calculates how much to pay to settle claims for death and maturity. The surplus in the fund left after the life these liabilities is credited to the account of policyholders in the form of a bond.
In a ULIP too, the insurer deducts the cost for insurance life (mortality rates), costs of administration and fund management expenses.
The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The participation of the insured in the fund is represented by the number of units.
The unit value is determined by the total value of all investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the background of your choice. Insurers usually offer three options – an action (growth) funds, balanced funds and a fund that invests in bonds. In both policies benefits "as well as in units of the policies, much of the first year premium goes to pay commissions to agents.
ULIPs are similar to mutual funds?
In structure, yes, the objective will not. Due to high charges of first year, funds Mutual are a better choice if you have a horizon of five years. But if you have a horizon of 10 years or more, then ULIPs have an advantage including expenses commission.
As a result, find it hard to beat mutual funds in the first five years. But in the long term, managers ULIP have several advantages over mutual fund managers more. Because policy premiums are produced at regular intervals, investments can be planned so more uniform.
Mutual fund managers can not have a similar long-term vision because they lack the bulk investors can move money in and out of short-term plans.
Why insurance companies prefer ULIPs?
Insurers love ULIPs for several reasons. Most important of all, insurers can sell policies with less capital than would be necessary if sold traditional policies.
In the traditional "with profits policies," the insurance company assumes the investment risk to the extent of the amount insured. In ULIPs, the insured has the largest share of investment risk.
Since ULIPs are designed to mobilize savings, insurance companies that provide the opportunity for a large part of the asset management company, which has traditionally been dominated by mutual funds.
Top Five ULIPs in India
1. Tata AIG Life – Invest Assure II, 2. MetLife – Met Smart Plus, 3. HDFC Standard Life-Ulep, 4. Bajaj Allianz – Unit Gain Plus Gold, 5. Bharti AXA Life-confident future.
Conclusion
ULIPs address and overcome several problems that have as an investor about life insurance and liquidity, flexibility and transparency or the lack thereof. No wonder that ULIPs is known as one of the most important innovations of recent times introduced by the insurers.
About the Author:
D.BHUVANESWARI
No.29, Nethaji Nagar,
Hasthampatty,
Salem-636 007
Mobile:9787964928
E-Mail: bhuvana.skvab2005@gmail.com
ACADEMIC QUALIFICATION
Highest Qualification
Degree
M.Phil in Commerce
Academic year 2007-2008
Academic record 74%
Division 1st class
Institution Periyar University, Salem
M.Phil Thesis
Title : “A Study on E-Banking Services in ICICI Bank with Special reference to customers in Salem City”
BOOKS AND ARTICLES
Book:
1. Published a book named “Banking Theory, Law and Practices”
Article Source: ArticlesBase.com – Unit Linked Insurance Plans
