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How To Choose A Product?

The selection of the type of insurance product


greatly depends on the risk taking ability of the
investor. This ability is ascertained through a
number of factors, which include the following:
Income.
Age and number of dependents in the family.
Investment value
Type of investor.
Volatility

Comparison between
ULIPS and Traditional plans
ULIPS

Traditional Plans

Definitio A ULIP is a market linked product


n
that combines the best of
insurance and investment. Though
risk cover is promised, returns
solely depends on the market
performance
ULIP is investment oriented

Traditional plan is
insurance cum
investment plan that
promises both risk cover
and returns to the
investor
Traditional Plan is
insurance oriented

Investm
ent

The investment is made into a


flexible choice of funds between
debt, equity or hybrids

A major fraction invested


in debt instruments

Flexibili
ty

Flexibility in switching between


funds (usually free or involves
nominal charges)
Premium and Sum Assured can be
decided by the investor

Only one type of fund is


involved and that too is at
the discretion of the
insurance company
Premium to Sum Assured

ULIPS

Traditional Plans

Risk Factor

designed for slightly more


aggressive investors who able
to handle the turbulence of the
market
High risk, high returns products

designed for those who


want returns but without
riding the highs and lows
of market
Risk free but at the same
time return free

Transparen
cy

Investor can track his


investment portfolio to assess
the daily performance of his
funds

The investors premium


flows into a common fund
which is usually not
disclosed to him

Payback
Potential

Sum assured has to be


delivered to the investor;
however the returns solely
depends on the market
performance

Being a no risk
investment, no
substantial returns can be
expected from Traditional
Plans

Liquidity

The money can be withdrawn


from your fund but only after
the lock in period which can be
anywhere between 3 to 5

Traditional Plan involves


locking in your funds.
Funds cant be touched
before death or maturity

Conclusion
After understanding ULIPs and traditional plans it is
important to understand the criteria for choosing
between a traditional insurance plan and a ULIP.
The choice requires considerable analysis, and largely
depends on the profile and goal of the investor.
The investors risk taking ability, which includes her
age, income or return expectation is a crucial factor in
determining the right choice for him.
For instance, a young investor may be more
aggressive and opt for ULIPs, whereas an older person
within the same income bracket may choose an
endowment policy for stability.