ENTER ULIPS - A NEW PARADIGM :
Complying with the condition imposed by the Reserve Bank of India, to maintain solvency margins, the Life Insurance Companies started launching Unit Linked Insurance Plans, where no fixed returns are assured to the client and the returns depend on the market performance. All Life Insurance companies started selling ULIPs with vigour and enthusiasm that markets are headed North and that BSE Sensex would touch 1 lakh.
Complying with the condition imposed by the Reserve Bank of India, to maintain solvency margins, the Life Insurance Companies started launching Unit Linked Insurance Plans, where no fixed returns are assured to the client and the returns depend on the market performance. All Life Insurance companies started selling ULIPs with vigour and enthusiasm that markets are headed North and that BSE Sensex would touch 1 lakh.
Come 2008 the entire scenario has changed. There was gloom surrounding Stock Markets and the clients, who were unfamiliar with the fluctuations of the Markets, felt let down by Insurance Companies. The very people who stood in queues all day to pay the premiums were dejected and frustrated. The delicate fibre of confidence and trust, which binds an Insurance Agent and a client started to fade away slowly.
RE-ENTRY OF CONVENTIONAL PLANS :
For well over 50 years, the risk-averse average middle class Indian, had never felt a jolt like this. There were redemption of ULIPs all over and people just refused to listen. This even affected the Mutual Funds market and the stock market. The conventional plans of insurance, which do not participate in the market but still give a return of 6 to 7% per annum, started to gain ground.
We are all back to square one - still unable to de-link 'Insurance' and 'Investments'.
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