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Bajaj Allianz Life Insurance Company is expecting the share of its unit-linked insurance plans (ULIPs) – as a proportion of its total sales – to increase in the coming years.
According to Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life, the long-term capital gains (LTCG) tax on equity is likely to give a thrust to ULIP sales.
ULIPs currently account for 74 per cent of Bajaj Allianz’s total product mix.
It has nearly 50 per cent share in the company’s total assets under management, which stood at around ₹52,000 crore as on January 2018.
Growth factor
“Overall sale of ULIPs is likely to gain pace for the industry; we expect it to grow relatively faster for us depending on how the markets perform,” Reddy told BusinessLine .
He was in the city for the launch of the company’s new ULIP plan, Goal Assure, on Tuesday.
He, however, did not specify how much would ULIPs account for in its total sales in the coming years.
The company currently has six ULIPs in its portfolio.
High expense ratio
ULIPs, which had drawn the ire of insurance regulator IRDAI for being rampantly mis-sold, turned more investor-friendly after 2010 when the regulator capped expenses, put a five-year lock-in, and set a minimum sum assured requirement on such schemes.
According to Reddy, the expense ratio on ULIPs have since come down. The total expense ratio for Bajaj Allianz Goal Assure would be in the range of 1.25-1.35 per cent for equity funds, 0.95 per cent for debt funds, and an administration charge of ₹400 a year. This will still work out to be lower than the total expense ratio of around 2.25 per cent charged by mutual funds, he said.
“Over a period of time ULIPs had lost flavour, but that changed with the regulator coming in with guidelines in 2010. Now, with this LTCG tax benefit, we expect the ULIP industry to revive,” he said. The company’s Goal Assure plan, which will be sold online primarily and also through the direct channel, would target millennials (investors in the age bracket of 25-35 years) in the ‘urban affluent segment’.
“We want to position this product in that [urban affluent] segment and address the need of customers who have certain aspiration goals,” he said.
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