Ask Mint | Ulips: creating wealth over the long term

Ask Mint | Ulips: creating wealth over the long term

The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.

Due to the current volatility in the stock markets caused by the recent global and Indian political and economic conditions, I am really worried about my investments in unit-linked policies. Please let me know if I have made the right decision by investing in them.

Unit-linked insurance policies, popularly known as Ulips, provide the twin benefits of protection plus investment returns.

Ulips provide high flexibility in financial planning and are important tools for creating wealth over the long term.

They can be used by an individual to structure asset allocation depending on the person’s risk appetite.

India’s macroeconomic factors, such as favourable demographics, high savings rate in the economy and low equity penetration, provide significant opportunities for products such as Ulips.

It is advisable to buy Ulips with a long-term objective, as such short-term market fluctuations may not necessarily have much of an impact on the performance of the Ulip. Rest assured, you have made a wise decision.

I am 25 years old and want to invest in a plan that doesn’t have high charges and is simple. I have limited money to spend and I am not looking at returns right now.

The simplest form of life insurance is a pure risk cover, known as a term plan.

The term plan works like a contract that provides a specified death benefit, but has no cash build-up or investment component.

Since the premium for a term plan is low, a person may get adequately insured for a relatively low premium cost.

Readers are welcome to write in with their queries to The questions will be answered by senior executives from leading insurance firms.

This week’s expert is Rajesh Relan, managing director, MetLife.