The Hindu Business Line : Insurance cover

Unit Linked Insurance Plans (ULIPs) have revolutionised the insurance industry in India. Till 2000, with the monopoly of LIC, insurance schemes were conceived as long-term plans with only a few choices.

But with the entry of the private players in a vast, open market in 2000, many new plans such as like the ULIPs came on the scene.

To name a few, the lifetime plan of the ICICI Prudential was a big hit prompting other players to initiate similar insurance plans.

It is welcome that the Insurance Regulatory and Development Authority (IRDA) is against redeeming ULIPs earlier than three years and for insisting that such plans include a minimum sum assured in the event of death in order to highlight the risk component of insurance contracts.

With the maximum lock-in period of three years, the focus will shift from short-term returns to long-term benefits.

ULIPs cater to the needs of those investors looking for life cover and asset creation together. Otherwise, separate term plans can provide life cover while mutual funds help create wealth. All in all, the initiative is good for the customers, advisors and the insurance companies as well.

Shyamkant R. Satpute

Pune

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in