The Hindu Business Line : ULIP schemes find fresh demand

With customers perceiving increased valuations in the stock markets after the recent plunge, there has been a renewed interest in ULIP schemes of insurance companies.

The growing demand from our existing customers to shift over from balanced schemes, which invests partly in equity and the remaining in other funds, to the Maximiser series, which invests almost exclusively in equity alone, after the recent volatility in the stock markets stands testimony to this. This trend was visible right through May and carried on into the first two weeks of June, Mr N.S. Kannan, Executive Director of ICICI Prudential Life Insurance Company, said at a press conference.

Elaborating on the reasons for this growing shift towards ULIP schemes, Mr Kannan said insurance investments into the equity markets have even a longer tenure than mutual funds. On a 15 year-cycle, the equity markets have invariably given high returns.

Customers of ICICI Prudential have the facility to switch from one scheme to another and demand for ULIP schemes continue to rise. Of the Rs 44 crore that was switched during May, 79 per cent was to the Maximiser scheme, while 21 per cent was to the Preserver series which offers maximum security.

Long-term monies

This shows that retail customers who form the bulk of ICICI Prudential's customer base are still keen to put their long-term monies towards specific goals, into equities, Mr Anup Rau, Vice-President and Head of Sales South, said.

Of the Rs 113 crore of new business premium that was collected by the company during the same month, 85 per cent went into the Maxmiser series, 12 per cent towards the Balanced series, two per cent towards the Protector series (debt funds) and one per cent to the Preserve series. This shows that customers are keen to leverage the lower NAVs to their advantage and enter equity funds at these new lower levels. Commenting on the volatility of the markets, Mr Kannan said: "We believe that market shifts are more due to technical rather than fundamental factors. It is heartening to know that retail customers have become more aware and understanding of such movements, and are investing for the long-term keeping in mind their asset allocation requirements and also continued faith in our fund management abilities."

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