Life Insurance : ULIPs vs Traditional Products
Life Insurance : ULIPs vs Traditional Products
Thus we find that traditional products sales have suddenly taken off. This is primarily because these products now allow the insurance agents and distributors to earn their fat commissions, and not because suddenly traditional products are better for customers than ULIPs. On the contrary, today, a ULIP is a great savings and insurance product.The very agents who were pushing ULIPs down the throat of unsuspecting customers do not consider ULIPS as the flavour of the season anymore. They have now fallen back upon the traditional products where IRDA has not laid down to any guidelines for commission level distributors.
If we look at the data coming out, we see that 50% of Reliance Life's product sales are now
traditional products, whereas a year ago, only 15% was through traditional products. Birla
SunLife now generates 30% of their premium through ULIPS as compared to only 8%
through ULIPs a year earlier. In the case of ING Vysya Life insurance, only 10% of their sale
is through ULIPs now. All the insurers narrate the same story about how they are trying to
reduce their reliance on ULIPs . But the real reason for the decreased importance of ULIPs is because the insurer can not pay enough commissions on ULIPs to keep the distributors
happy due to the IRDA guidelines. And thus, they are resorting to selling traditional
products. So next time, your friendly neighborhood agent espouses the virtues of a
traditional life insurance product, do know that the real reason for the promotion is
something completely different!
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