Types of Insurance Plans - Traditional Life Insurance or Unit Linked Insurance Plan
Insurance Plans - At a glance
Broadly, insurance plans can be distinctly divided into ULIPs and traditional plans. A brief detail of both segments:
Unit Linked Insurance Product
ULIPs have gained high acceptance due to attractive features they offer. These include:
1. Flexibility
1. Flexibility to choose Sum Assured.
2. Flexibility to choose premium amount.
3. Option to change level of Premium /Sum Assured even after the plan has started.
4. Flexibility to change asset allocation by switching between funds
2. Transparency
1. Charges in the plan & net amount invested are known to the customer
2. Convenience of tracking one's investment performance on a daily basis.
3. Liquidity
1. Option to withdraw money after few years (comfort required in case of exigency)
2. Low minimum tenure.
3. Partial / Systematic withdrawal allowed
4. Fund Options
1. A choice of funds (ranging from equity, debt, cash or a combination)
2. Option to choose your fund mix based on desired asset allocation
Traditional Plans
These are the oldest types of plans available. These plans cater to customers with a low risk appetite. Some of the common features of traditional plans are:
1. Steady Investment
1. Major chunk of investible funds are in debt instruments
2. Steady and almost assured returns over the long term
2. Features
1. Death benefit is Sum Assured + guaranteed & vested bonus
2. Helps in asset creation as they are for a long tenure
3. Premium to Sum Assured ratios are fixed for each plan and age.
4. Generally withdrawals are not allowed before maturity
It's a summarized overview of ULIPS & Other Life Insurance Plans
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