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When the requirement of taking insurance arises, the initial contact is established with the insurance company through the medium of an insurance agent. They are trained professionals having expertise in selling the insurance products with adequate information on the various kinds of life insurance options and the benefits they provide. They have the authority to sell one or multiple insurance policies on life insurance, health, vehicle, children, retirement planning, ULIP, and others. To sum up, the insurance agent plays a vital role in accessing information on different policies, helping you choose the right insurance policy, premium payment modes and arranging the receipts. Unit Linked Insurance Policy, better known as ULIP, has gained immense popularity in the investment and insurance segment since its launch in 2004. In today’s scenario, ULIP is one of the effective forms of long term insurance. However the success ratio does not entirely rest on credibility, but also on insurance agents hard selling. This aggressive selling at times has made unsuspecting investors its prey. Insurance agents provide the service of an advisor and a guide while purchasing a ULIP policy, which is a complicated instrument and involves a good amount of homework to understand the fundamentals. ULIP is different from other forms of insurance products as it requires a better level of expertise and contribution from the insurance agents. If you are interested in ULIPs and have been approached by an agent, make sure to enquire from him the basic know-how on ULIP, like what it is and other important questions mentioned below: 1. How much will be the returns on the ULIP? Following the norms of IRDA, the agents are supposed to give an illustration assuming 6% to 10% returns. In scenarios when it is long term, the returns can be higher approximately 10% or more. But any claims by the agent around or more than 18% - 20% must be looked at with suspicion and considered as a bluff. 2. What are the cost and charges involved in ULIP? Before you buy the policy, the agent should mention all the costs involved like premium allocation charges, fund management charges, surrender charges etc. Remember that no charge is ever nominal or inconsequential. So take care to read the fine print and cross verify all the agent’s claims through a valid company brochure. 3. Have your risk profile and requirements analysed. The agent can recommend you to buy a ULIP or any other life insurance policy only after a detailed financial study of your salary, expenses, future objectives, and your risk bearing capacity. With a thorough analysis the agent should be able to suggest a ULIP policy that would be a safe investment for you. 4. Is the suggested ULIP the best investment for you from all the others available in the market? Be frank and blunt when enquiring about the uniqueness of the ULIP, anything different that the particular ULIP offers in comparison to others. Ask about the special features of the ULIP and how they can benefit you. Don’t just go by the claims, ask for facts and references. 5. How is it better than a mix of Term Insurance and Mutual fund SIP? The ULIP should perform better than Term Insurance and Mutual fund SIP as it is a merger of insurance and investment. It is the switching benefit of ULIPs that gives them an advantage over Term Insurance and MFs. Don’t believe the tall claims of the agent that ULIP will get better results than Mutual Funds. Make him illustrate it with true examples.
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Your List of Must Ask Questions From A ULIP Agent
