Policyholders can expect better levels of service as insurance companies will invest more in better equipping intermediaries
This will ensure greater liquidity for the customer and reduce his loss in case of premature surrender. Simpler customer disclosures mandated under the new guidelines will increase transparency and reduce mis-selling.
This is in addition to the mandatory sign off on benefit illustration and the free look period of 15 days during which he can cancel his policy sans any penalty.
The insurance component in new Ulips will be significantly higher than earlier. Hence, these new products will carry a higher mortality charge. Increase in lock in period from three to five years may impact immediate liquidity, in case of premature surrender. Further, differentiation between different Ulips will go down resulting in broadly even cost and structures.
Policyholders can expect better levels of service as insurance companies will in vest more in better equipping intermediaries both in terms of knowledge and advisory capability. Further, mandatory need based selling whereby insurance agents will be required to assess the customer's exact insurance needs based on his financial and filial profile may also soon become an integral part of the sale process. Customers can look forward to far better product and service experience.
However, customers who brought Ulips before the new regulations have nothing to worry about since they are not impacted by the new regulations, which apply prospectively.
These customers continue to be governed by the contractual terms agreed between them and their insurer at the time of purchase.
UNIT-LINKED insurance policies (Ulips) are extremely transparent products. It tells the customer where his money is being invested and what charges he is paying. It also allows the customer to invest in equity in a systematic manner.
The new guidelines have made Ulips very customer-friendly. There is higher initial allocation of premium towards the investment component. Importantly, even allocation of charges through the policy term will enable the customer see a gradual build-up of his funds over time, enthusing him to pay his premiums regularly and stay invested for the entire policy duration. The new guidelines also restrict premature surrender penalty. This will ensure greater liquidity for the customer and reduce his loss in case of premature surrender. Simpler customer disclosures mandated under the new guidelines will increase transparency and reduce mis-selling.
This is in addition to the mandatory sign off on benefit illustration and the free look period of 15 days during which he can cancel his policy sans any penalty.
The insurance component in new Ulips will be significantly higher than earlier. Hence, these new products will carry a higher mortality charge. Increase in lock in period from three to five years may impact immediate liquidity, in case of premature surrender. Further, differentiation between different Ulips will go down resulting in broadly even cost and structures.
Policyholders can expect better levels of service as insurance companies will in vest more in better equipping intermediaries both in terms of knowledge and advisory capability. Further, mandatory need based selling whereby insurance agents will be required to assess the customer's exact insurance needs based on his financial and filial profile may also soon become an integral part of the sale process. Customers can look forward to far better product and service experience.
However, customers who brought Ulips before the new regulations have nothing to worry about since they are not impacted by the new regulations, which apply prospectively.
These customers continue to be governed by the contractual terms agreed between them and their insurer at the time of purchase.
In case of premature surrender of policies bought before the guidelines came into effect, surrender charges as specified at the time of purchase would apply. The important point to be realised is that Ulips are designed and structured to benefit the investor in the long term and there should not be significant difference between returns derived by old or new investors who plan to stay invested for the entire duration. At maturity, what will really matter is how many years one has contributed to build the corpus. Hence, customers who bought Ulips under the old dispensation are advised to stay invested.
