Can a high sum-assured Ulip offer better cover, returns?

These insurance products return various charges if you stick to the policy for the long-term

- Aprajita Sharma

Most insurance policies that mix life insurance and investment offer neither adequate life cover nor good investment returns. Think Ulips, or unit-linked insurance plans. Financial experts say, consumers are better off buying separate term insurance which has low premiums and also investing in a good mutual fund (MF) simultaneously. Over the past few years though, insurance companies have come up with new plans that provide term insurance cover with a higher sum assured in combination with Ulips that generate market-linked returns. But do these insurance products make the cut? "Pure term plans exist but we cannot ignore customers asking for the survival benefit. High sum-assured Ulips offer this in the best way possible," says Piyush Trivedi, joint president and head, Alternate Channel & Digital Channel, Kotak Mahindra Life Insurance Co.

The sum assured (SA) multiple in TULIPS could be 100-200 times of the annual premium, depending on the combination of the policyholder's age, policy term and premium payment term). For ULIPs, the returns are generally 10 times of the annual premium.

There are additional benefits if you stick to the policy for the long term. For example, return of mortality charges, return of fund management charges, refund of premium allocation charges, and loyalty additions, among others.

"These are fairly new products. Tata AIA Life Insurance (Tata Smart Sampoorn Raksha) was the first one to launch it in 2021," says Vivek Jain, Head of Investments at Policybazaar. Other such plans include HDFC Smart Protect, Bajaj Invest Protect Goal, Max Smart Flexi Protect Solution and ICICI Pru Protect NGain. Kotak Life Insurance is the latest entrant and launched its TULIP on 20 December.