Monday, January 2, 2012
If you know the kind of policy that suits you, this option can help you get better returns from the Ulip.
Electronic transactions are fast becoming the mode of choice in the insurance arena. After introducing health plans and motor insurance policies in the cyber market, some insurance firms have now launched another category, unit-linked insurance plans (Ulips). While a few experts are sceptical about selling complex products online, most companies are aggressively pitching their Ulips on the web and wooing customers by promising them cheaper policies. Should you buy such an online policy?
Online UlipsAre being touted as cheaper than their offline versions. However, the policies being sold on net are not the same as being sold via agents or other distribution channels. While this makes it difficult to draw a comparison between the two products in terms of premium, the very fact that there is no commission for the intermediary and, hence, no premium allocation charge means that more of your premium is being invested. This results in a higher fund maturity value for the online policies For InstanceAegonReligare’s Maximize plan has a zero premium allocation charge, whereas its offline product money secure has a premium allocation of 10% in the first year. This means that the amount you get on maturity will be more in the case of online version. Says AkshayMehrotra, chief marketing officer, Policybazaar, an insurance aggregator: “It may be difficult to draw a direct comparision, but the Ulips being sold online are cheaper as the distribution cost is weeded out.”
Yateesh Sirvastava, Chief Marketing officer of AegonReligare, says, “ There is hardly any difference in the premium of ULIP (unit linked insurance plan) being purchased online and the one being bought through an agent. The difference lies in the lower premium allocation charges for online policies, which means that more of your money is being invested.” If you pay a premium of Rs.100 for aUlip, buying it through an agent this will mean that Rs.80 will be invested, but if you in an online Ulip, about Rs.95 will be invested.
However before buying an online Ulip, you need to assess your risk appetite and check the expenses associated with the plan. Consider other charges, such as policy administration cost, fund management fee and mortality charge.
Rituraj Bhattacharya, head, market management, Bajaj Allianz Life Insurance says, “You should consider the difference between the gross yield and the net yield. If you can see a clear advantage in favour of the online plan compared with the offline is higher for the online policy, opting for it makes more sense.”
Currently, only a handful of insurance companies are selling online Ulips. These include HDFC Life, AegonReligare, Bajaj Allianz, ICICI Prudential and India First. To buy online Ulip, you can log in to the website of these companies or that of an insurance aggregator, such as policybazaar.com, iave.com and myinsuranceclub.com. These sites allow you to compare different policies.
After logging in, you will have to fill your details in a form and then either e-mail the scanned copies of your identity proof, address proof, age verification proof and income proof, or courier these to the address provided. As you are furnishing all the information yourself, instead of through an agent, there will be fewer chances of a mistake creeping in. If you get stuck at any point click on the ‘talk to adviser’ option. Either a representative will be available for an online chat or he will get back to you within a day.
Only the investors who are aware of their risk appetite and are capable of evaluating the various plans on offer should buy an online Ulip. Says Bhattacharya: “if you are not sure about the product that you are choosing, your risk appetite or the time horizon suitable for you, then this may not be the right medium for you. “ In such a case, it might be better to follow the opinion of a financial adviser.