The new 4G ULIPs have low cost and zero commission where charges like premium allocation and policy administration are typically zero.
Unit-Linked Insurance Products (ULIPs) have evolved over the years with more transparency and reliability as an investment product. Earlier agents and distributors made high commissions through ULIPs, which led to rampant misselling, and customers were misled that the investment required the payment of premiums for only 3 years and were not made aware of the benefits of long-term investment.
IRDAI limited the charges on all ULIPs, which limited the capping of ULIP charges around 2010. HDFC Life was the first company to introduce zero commission ULIP, named Click2Invest, in 2015.
The new 4G ULIPs have low cost and zero commission where charges like premium allocation, policy administration are typically zero. The fund management charges are also capped at 1.35% by IRDAI and range between 1 and 1.35%. There is an inbuilt life cover in the ULIPs for which a customer pays mortality charges.
Companies like Bajaj Allianz Life Insurance disrupted the market by introducing the return of mortality charge (ROMC) feature through its Goal Assure ULIP. The industry is also catching up the innovation and many other insurance companies like Canara HSBC with their Invest 4G ULIP and HDFC Life Insurance with their Click 2 Wealth have also introduced the ROMC feature.
(By Santosh Agarwal, Chief Business Officer-Life Insurance, Policybazaar.com)
(Disclaimer: These are the views of the author. Please consult your financial advisor before making any investment)