'ULIPs are suitable for all customers'

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: Amit Gupta, director, marketing and communication, ING Vysa Life Insurance, Akshay Mehrotra, head - marketing, Bajaj Allianz Life Insurance, spoke with Abhay Rao of The Financial Express about life insurance products like ULIPS and how can they fit into our investment and insurance parts of our financial planning. Excerpts:

Amit Gupta

•What are the advantages of a ULIP over other life insurance products?

Unit linked plans (ULIP’s) are different from traditional plans purely because, they are much more transparent, various charges are shared with the customer before the sale of the product, so as to enable the customer to make an informed decision.

Customers have the flexibility to choose their life cover. Also the customers have the choice of multiple fund options based on their risk appetite, thereby enabling an investor to make the desired returns from the investment. These are some of the advantages of Unit linked plans.

•What should investors consider or look out for when choosing a ULIP?

Basically a ULIP is an insurance plan and like for any insurance plan whether a traditional or ULIP the customer should look for adequate insurance cover based on their age and risk profile.

If one chooses a non – pension product then he/she must look at first protecting themselves with adequate insurance cover for a suitable period which could be till the retirement age. After achieving this primary objective they should look at a corpus that will be built up over the policy period basis their risk appetite.

If one opts for a pension plan, then one should target to build adequate corpus that will help them lead a happy retired life again basis their risk appetite.

In the process of meeting their objective the customer undergoes different phases through the policy period where he/she may want to re-consider the decisions e.g. switch funds from high risk to low risk or otherwise, re-direct the premiums in to funds of choice etc.

Also Customers should have a clear understanding on how unit linked plans work and should have sufficient information on the fund options available for the plan chosen. He/she should be able to switch fund options depending on the market conditions prevailing. Also customers should be cautious of the downside risk in ULIPs and therefore should choose unit linked plans with a long term perspective in mind.