Why Should ULIPs Be Part of Your Financial Planning in 2024?

The ULIP Revolution in the Insurance Industry

Unit-Linked Insurance Plans (ULIPs) have significantly transformed in recent years. Once full of misconceptions and burdened by a lack of transparency, ULIPs are now emerging as a powerful tool for financial growth in 2024. This shift is partly due to a maturing market, stricter regulations, and a renewed focus on investor protection. Insurance companies are now designing ULIP products that meet a wider range of needs and risk appetites, making them a more flexible option for building a well-rounded financial portfolio. 

Top ULIP Funds^†

Returns 3 Years 5 Years 10 Years

Equity (Large, Mid Cap) Balanced Debt

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

High Growth Fund

Max Life

AUM:8,482 Cr

8,482 Cr

NAV

119.99

1.59%

Returns

23.95%

Returns

31.9%

Highest Returns

Returns

20.47%

Get Details

Whole Life Mid Cap Equity Fund

Tata AIA

AUM:13,435 Cr

13,435 Cr

NAV

158.69

2.49%

Returns

21.08%

Returns

27.7%

Highest Returns

Returns

20.43%

Get Details

Virtue II

PNB Metlife

AUM:3,532 Cr

3,532 Cr

NAV

77.53

1.12%

Returns

17.59%

Returns

26.28%

Highest Returns

Returns

17.97%

Get Details

Accelerator Mid-Cap Fund II

Bajaj Allianz

AUM:6,452 Cr

6,452 Cr

NAV

86.49

1.27%

Returns

17.79%

Returns

22.67%

Highest Returns

Returns

16.96%

Get Details

Opportunities Fund

HDFC Standard

AUM:40,966 Cr

40,966 Cr

NAV

78.44

1.16%

Returns

15.75%

Returns

23.42%

Highest Returns

Returns

16.86%

Get Details

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

Whole Life Aggressive Growth Fund

Canara HSBC Oriental Bank

AUM:869 Cr

869 Cr

NAV

93.59

0.82%

Returns

16.11%

Returns

20.41%

Highest Returns

Returns

15.83%

Get Details

Whole Life Stable Growth Fund

Canara HSBC Oriental Bank

AUM:266 Cr

266 Cr

NAV

61.92

0.32%

Returns

12.53%

Returns

15.66%

Highest Returns

Returns

12.78%

Get Details

Balanced Fund

Canara HSBC Oriental Bank

AUM:380 Cr

380 Cr

NAV

48.06

0.34%

Returns

11.49%

Returns

14.21%

Highest Returns

Returns

11.91%

Get Details

Asset Allocation Fund II

Canara HSBC Oriental Bank

AUM:341 Cr

341 Cr

NAV

31.32

0.18%

Returns

9.45%

Returns

12.98%

Highest Returns

Returns

11.36%

Get Details

Save N Grow Money Fund

Canara HSBC Oriental Bank

AUM:68 Cr

68 Cr

NAV

58.7

0.37%

Returns

8.69%

Returns

11.34%

Highest Returns

Returns

10.82%

Get Details

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

Builder

Canara HSBC Oriental Bank

AUM:243 Cr

243 Cr

NAV

89.55

0.06%

Returns

6.87%

Returns

8.26%

Returns

8.91%

Highest Returns

Get Details

Whole Life Income Fund

Canara HSBC Oriental Bank

AUM:802 Cr

802 Cr

NAV

38.31

0.03%

Returns

6.22%

Returns

7.01%

Returns

8.18%

Highest Returns

Get Details

Debt Fund

Canara HSBC Oriental Bank

AUM:482 Cr

482 Cr

NAV

36.29

0.04%

Returns

5.92%

Returns

6.91%

Returns

7.93%

Highest Returns

Get Details

Conservative Fund

Canara HSBC Oriental Bank

AUM:233 Cr

233 Cr

NAV

55.4

0.09%

Returns

7.01%

Returns

7.98%

Highest Returns

Returns

7.92%

Get Details

Protector

Canara HSBC Oriental Bank

AUM:307 Cr

307 Cr

NAV

64.22

0.06%

Returns

6.07%

Returns

7.01%

Returns

7.89%

Highest Returns

Get Details

Disclaimer :
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

The Past and Present of ULIPs

The Early Days of ULIPs and Why They Got a Bad Reputation?

ULIPs have come a long way; their past wasn't always great. Here's what their early days looked like and the challenges they faced:

• The Good Intention: ULIPs were introduced in the 1970s to combine life insurance protection with the potential for growth through market-linked investments. This offered a unique benefit compared to traditional plans.

• Lost in Translation: The initial focus seemed to be on selling insurance with an investment tied on. This led to a lack of clarity about how the investment component actually worked.

• High Costs, Low Transparency: ULIPs in the early days often came with high hidden charges and complex fee structures. Investors weren't always fully informed about these costs, making it difficult to understand the true value of ULIPs.

• Hidden Costs: Early ULIPs came loaded with high charges – upfront commissions, policy allocation charges, and more. This meant less of your money actually went towards investment.

• Confusing Structure: The investment aspect of ULIPs could be complex, with fees and features not always clearly explained. This left many investors feeling lost and unsure.

• Focus on Insurance, Not Investment: The initial push for ULIPs seemed more about selling insurance with an investment add-on rather than highlighting the long-term growth potential. 

How ULIPs Became Investor-Friendly?

ULIPs have undergone a major change recently. Gone are the days of hidden charges and confusing structures. Here's how regulations and a shift in focus made ULIPs more investor-friendly:

• IRDAI’s Role: The Insurance Regulatory and Development Authority of India (IRDAI) stepped up with stricter regulations. These regulations mandated clear communication of charges, product features, and investment options. No more hidden fees or surprises. 

• Cost Cutting Crusade: ULIP charges have been significantly reduced. Lower upfront commissions, allocation charges, and a focus on efficiency have made ULIPs more cost-effective. More of your money goes towards growing your investment! For example:

  • They have completely eliminated policy administration and premium allocation charges.

  • After maturity, they also return the mortality charge.

  • In addition, fund management charges can now be a maximum of 1.35% per annum.

• Transparency: ULIPs now have clear product brochures. These brochures explain fees, fund performance, and features in an easy-to-understand manner, empowering investors to make informed decisions.

• Flexibility: Modern ULIPs offer more flexibility. You can invest as much as you want in equity and debt according to your risk appetite. You can invest 100% in equity or 100% in debt. And many companies don't even charge for fund switching!

• Focus on Investment Value: The core focus of ULIPs has shifted. Now, the emphasis is on the potential for market-linked growth alongside the life cover benefit. This aligns better with investors seeking long-term wealth creation.

• Increased Accessibility: Traditionally, ULIPs might have involved a lot of paperwork and limited access to information. Digitization has changed that. Online portals and mobile apps allow investors to easily access policy details, monitor fund performance, and make switches between funds. This transparency and ease of use make ULIPs more appealing to investors.

Here's the best part of New Age ULIPs:

Imagine if something unfortunate happens to you and you are no longer around. What will happen to your family and their future? Don't worry! With the waiver of premium benefit, the insurance company will pay your premium itself, so that your ULIP plan does not lapse and your investment for your goals continues.

Examples of New-Age ULIPs:

How 4G ULIPs Changed the Perception?

4G ULIPs, or Fourth Generation Unit Linked Insurance Plans, represent a significant upgrade in the ULIP industry. They address the past shortcomings of ULIPs and offer a more investor-friendly experience. Here's how 4G ULIPs have changed the game:

What are 4G ULIPs?

These are ULIPs with a renewed focus on transparency, flexibility, and cost-effectiveness.

Benefits of 4G ULIPs:

• Lower Costs: IRDAI regulations and a focus on efficiency have resulted in significantly reduced charges. This translates to more of your money being invested and potentially growing.

• Enhanced Transparency: 4G ULIPs come with clear communication of fees, fund performance, and product features.

• Flexibility is King: Investors can now switch between investment funds within the ULIP. This allows you to adapt your investment strategy to changing market conditions and evolving goals.

• Focus on Investment Value: The emphasis in 4G ULIPs has shifted towards the potential for market-linked growth alongside the life cover benefit. This aligns better with investors seeking long-term wealth creation.

How 4G ULIPs Reshaped the Industry:

• Restored Trust: By addressing past issues and prioritizing transparency, 4G ULIPs have helped rebuild trust in ULIPs as a reliable financial tool.

• Empowered Investors: Clear communication and flexibility empower investors to make informed decisions and manage their ULIPs effectively.

• Increased Competition: The focus on cost-effectiveness and investor benefits has led to increased competition among insurers, potentially leading to even better ULIP options in the future.

Are ULIPs Right for You?

ULIPs can be a strong contender if you want:

• Growth Potential: Invest for long-term wealth creation alongside life cover.

• Flexibility: Adapt your investment strategy within the ULIP as your goals evolve.

• Transparency: Make informed decisions with clear communication of fees and features.

Conclusion

In conclusion, ULIPs have shed their past baggage and emerged as strong contenders in the financial planning area. With increased transparency, flexibility, and the potential for market-linked growth, ULIPs are definitely worth considering for your financial planning and investments in 2024.