INVESTORS' LOVE FOR ULIPS CONTINUES

New Delhi: The current bearish trend at the stock market has not affected the appetite of investors for the Unit Linked Insurance Plans (ULIPs), which has continued to grow with 70 to 90% of new investors preferring insurance plans with option for investment in equity.

"ULIP-linked products continue to be dominant though the market has not performed well in the last few months," Bhargav Dasgupta of ICICI Prudential said. About 70-90% of new customers are opting for ULIPs with investment in equity, a senior official of the Aviva Life Insurance said. ULIPs are fundamentally mutual fund schemes with an insurance component and gives investors option to switch from debt to equity or vice versa, without paying any fee.

Private life insurance industry, Dasgupta said, was expected to record a growth of 40% current fiscal. Insurance being a long-term investment proposition, customers find it more lucrative, which gives a higher return than the rate of price increase, said Max New York Life official, adding "ULIP products also provide flexibility to customers as they have the choice of switching from one fund to the other without paying any additional fee." Investors, he added, are comfortable with ULIP products as they believe that the fundamentals of the Indian economy are strong, the recent turbulence in the bourses notwithstanding.

Some insurance companies are offering products with capital guarantee to maintain confidence of customers, the official said. The BSE Sensex is on a downslide having slipped below the 13,000-mark in the first week of July from a high of 20,000 recorded in October 2007.

Source: PTI, Times of India