Self assessment questionnaire for ULIP buyers
ULIP or Unit Linked
Insurance Plan is a product designed to offer insurance and investments
opportunities for long term ULIP buyer. Ideally a 10 years or more
focus required by a ULIP buyer to get profit or good returns from his
investments. Short term focus to ULIP is not recommended because of the
charges tailed with ULIP products are comparatively higher from a mutual
fund or any other investment instruments.
In general, know that two types of ULIP’s, Type I and II. A Type I ULIP pays the higher of sum assured or fund value as death benefit, while TYPE II pays the sum assured as well as the fund value
In this article, I am presenting a bunch of questions that and investor should ask to himself for an assessment before planning to buy any ULIP products.
Investment objective
1. Identify what is your investment objective with ULIP?
2. Is the ULIP product designed to meet these objectives?
3. What is your investment horizon? "Short" or "Long"? If "short", don’t buy a ULIP product. It is designed in a way to get profit from long term investment. In an other word, it is a product intended to long term investor only.
Premium term and options
4. What is the minimum and maximum premium for the ULIP?
5. What are the premium payment options? Yearly, half yearly, quarterly or monthly?
6. Does the ULIP allow you to pay premium as per your option?
7. Years to pay premium without failures (most of the time this will be three years. But, some cases, it can extend up to 5 years.)
8. What are the methods available to pay premiums?
Insurance protection and its charge
9. What is the policy type? (Identify Type 1 or 2)
10. What is the level of insurance protection available with the product? (it can vary from 5 to 10 times of an annual premium)
11. What is the option to select your own insurance requirement with the ULIP?
12. What is the death benefit?
13. What are the critical illness covering in this insurance?
14. What are the accidental benefit in this insurance?
15. What are the exclusions in case of critical illness?
16. What are the medical checkup requirements for insurance?
17. What are the procedures and requirements to claim the insurance?
18. What are the Mortality charges for this given insurance? (It can vary year to year from 1.31% per $1000 to 5% or more. Depends on company and how the ULIP policy designed. Ask them and clear the point.
19. Will the mortality charge increase year to year? If increase, what is the maximum percentage it will increase?
Fund options and performance
20. How many funds are available with this product where your money is going to invest. (In most case, this can be from Equity fund, balanced funds, capital protection funds etc. etc. and a number of funds with the ULIP will be informed by the consultant or the advisor)
21. What is the benchmark for this fund?
22. What are the fund performance at least for last 5 years against its bench mark.
23. Find out the fund performance for at least last 5 consecutive years and what is the benchmark performance in these years (Compare both, ULIP fund and Benchmark, to find out whether the fund beating or outperforming its benchmark continuously or constantly. If it is not performing well with its benchmark, don’t go for that policy)
24. How many free fund switching options available with the product in an year?
25. What is the cost for an additional switch if required?
26. How frequently you will receive the fund performance report and policy statements?
Surrender options and charges
27. What are the surrender options of this policy? (If you surrender the policy within the compulsory premium paying years, your entire money will be lost)
28. What are the procedures and requirements to surrender the policy?
29. What is the surrender charges for the years after compulsory premium paying years? This can be vary year to year after the compulsory premium paying years and entirely depends on the insurance company. Identify and confirm. Refer Question# 7 for details)
Premium Allocation Charges
30. What are the premium allocation charge for first year?
31. What is the charge for 2nd, 3rd, 4th, 5th particularly?
32. Is the PAC continuing after 5th years, what are those percentage?
Policy Administration Charge
Commonly, policy administration charge is reducing by selling our fund unit monthly. Most of the case, this is not calculating in the percentage of yearly premium but a fixed amount of each month.
33. Identify what is the Policy Administration charge per month
34. Ask if there is any increase in the future?
Fund Management Charges
35. What are the monthly Fund Management Charges?
36. Do this charges vary to funds to fund?
37. What is the Fund Management Charge for various funds (this is helpful while switching the fund)
38. Will the FMC change? If change, what will be the maximum percentage in an year?
Top-up premium options
39. Find out the options to pay top-up premium in addition to the regular premium.
40. What is the allocation charges for top-up premium
41. What is the minimum and maximum top-up premium allowable
Miscellaneous charges
42. What are the miscellaneous charges other than mentioned above.
43. What is the policy redirection charges (This mean, you can pay your future premiums into a different selection of funds, as per your needs.
44. What are the partial withdrawal charges for year to year after completion of your compulsory premium paid years.
45. What are the revival charges in case you are not paying premium after compulsory premium paying years and want to pay later.
46. What are the miscellaneous charges applicable to policy by levying for any alternations to the policy.
47. What are the possibility of free servicing requests and what are the charge for an additional servicing request per year.
48. If charges applies to any of the above mentioned services, ask what is the charges? Specially, charges for premium revival, premium redirection, partial withdrawal, revival of policy and additional service requests.
49. If there is any other hidden cost other than all the above mentioned charges, ask to get clarification.
Loyalty units/bonus
50. Find out if the ULIP is providing any Loyalty Units/Bonus to you
51. If yes, what is the percentage?
52. What year your ULIP start getting loyalty units/bonus
Miscellaneous
53. What are the tax benefits while taking the ULIP if available?
54. Ask for any free-look period available
55. What are the procedure to surrender and receive the benefits once completing the term successfully.
56. Ask for the term and policies specially applicable to the ULIP
Proper knowledge through research is must prior selecting an investment instrument like costly ULIP. I have provided the self assessment questionnaire which enable you to collect 99.999% must have information before signing your first premium check to the ULIP company. I promise, this self assessment will give you maximum success to select a good ULIP. Remember, proper contact to the proper place and personal required to receive correct information to assess as per the questionnaire.
As a thumb rule, find out the charges of Premium Allocation Charge, Policy Administration Charge, Fund Management Cost of a ULIP for first 10 years and compare the total amount with one year premium amount you are paying. If the 10 year cost is more than 85% of 1 year premium amount, the ULIP is considered as costly.
Insurance: A Guide
"Remember kids, I have life insurance" - Adam Savage
This is a guest article from Tatyana Levin
These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).
The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.
A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed. But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.
Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.
These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason. The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.
The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.
About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com
In general, know that two types of ULIP’s, Type I and II. A Type I ULIP pays the higher of sum assured or fund value as death benefit, while TYPE II pays the sum assured as well as the fund value
In this article, I am presenting a bunch of questions that and investor should ask to himself for an assessment before planning to buy any ULIP products.
Investment objective
1. Identify what is your investment objective with ULIP?
2. Is the ULIP product designed to meet these objectives?
3. What is your investment horizon? "Short" or "Long"? If "short", don’t buy a ULIP product. It is designed in a way to get profit from long term investment. In an other word, it is a product intended to long term investor only.
Premium term and options
4. What is the minimum and maximum premium for the ULIP?
5. What are the premium payment options? Yearly, half yearly, quarterly or monthly?
6. Does the ULIP allow you to pay premium as per your option?
7. Years to pay premium without failures (most of the time this will be three years. But, some cases, it can extend up to 5 years.)
8. What are the methods available to pay premiums?
Insurance protection and its charge
9. What is the policy type? (Identify Type 1 or 2)
10. What is the level of insurance protection available with the product? (it can vary from 5 to 10 times of an annual premium)
11. What is the option to select your own insurance requirement with the ULIP?
12. What is the death benefit?
13. What are the critical illness covering in this insurance?
14. What are the accidental benefit in this insurance?
15. What are the exclusions in case of critical illness?
16. What are the medical checkup requirements for insurance?
17. What are the procedures and requirements to claim the insurance?
18. What are the Mortality charges for this given insurance? (It can vary year to year from 1.31% per $1000 to 5% or more. Depends on company and how the ULIP policy designed. Ask them and clear the point.
19. Will the mortality charge increase year to year? If increase, what is the maximum percentage it will increase?
Fund options and performance
20. How many funds are available with this product where your money is going to invest. (In most case, this can be from Equity fund, balanced funds, capital protection funds etc. etc. and a number of funds with the ULIP will be informed by the consultant or the advisor)
21. What is the benchmark for this fund?
22. What are the fund performance at least for last 5 years against its bench mark.
23. Find out the fund performance for at least last 5 consecutive years and what is the benchmark performance in these years (Compare both, ULIP fund and Benchmark, to find out whether the fund beating or outperforming its benchmark continuously or constantly. If it is not performing well with its benchmark, don’t go for that policy)
24. How many free fund switching options available with the product in an year?
25. What is the cost for an additional switch if required?
26. How frequently you will receive the fund performance report and policy statements?
Surrender options and charges
27. What are the surrender options of this policy? (If you surrender the policy within the compulsory premium paying years, your entire money will be lost)
28. What are the procedures and requirements to surrender the policy?
29. What is the surrender charges for the years after compulsory premium paying years? This can be vary year to year after the compulsory premium paying years and entirely depends on the insurance company. Identify and confirm. Refer Question# 7 for details)
Premium Allocation Charges
30. What are the premium allocation charge for first year?
31. What is the charge for 2nd, 3rd, 4th, 5th particularly?
32. Is the PAC continuing after 5th years, what are those percentage?
Policy Administration Charge
Commonly, policy administration charge is reducing by selling our fund unit monthly. Most of the case, this is not calculating in the percentage of yearly premium but a fixed amount of each month.
33. Identify what is the Policy Administration charge per month
34. Ask if there is any increase in the future?
Fund Management Charges
35. What are the monthly Fund Management Charges?
36. Do this charges vary to funds to fund?
37. What is the Fund Management Charge for various funds (this is helpful while switching the fund)
38. Will the FMC change? If change, what will be the maximum percentage in an year?
Top-up premium options
39. Find out the options to pay top-up premium in addition to the regular premium.
40. What is the allocation charges for top-up premium
41. What is the minimum and maximum top-up premium allowable
Miscellaneous charges
42. What are the miscellaneous charges other than mentioned above.
43. What is the policy redirection charges (This mean, you can pay your future premiums into a different selection of funds, as per your needs.
44. What are the partial withdrawal charges for year to year after completion of your compulsory premium paid years.
45. What are the revival charges in case you are not paying premium after compulsory premium paying years and want to pay later.
46. What are the miscellaneous charges applicable to policy by levying for any alternations to the policy.
47. What are the possibility of free servicing requests and what are the charge for an additional servicing request per year.
48. If charges applies to any of the above mentioned services, ask what is the charges? Specially, charges for premium revival, premium redirection, partial withdrawal, revival of policy and additional service requests.
49. If there is any other hidden cost other than all the above mentioned charges, ask to get clarification.
Loyalty units/bonus
50. Find out if the ULIP is providing any Loyalty Units/Bonus to you
51. If yes, what is the percentage?
52. What year your ULIP start getting loyalty units/bonus
Miscellaneous
53. What are the tax benefits while taking the ULIP if available?
54. Ask for any free-look period available
55. What are the procedure to surrender and receive the benefits once completing the term successfully.
56. Ask for the term and policies specially applicable to the ULIP
Proper knowledge through research is must prior selecting an investment instrument like costly ULIP. I have provided the self assessment questionnaire which enable you to collect 99.999% must have information before signing your first premium check to the ULIP company. I promise, this self assessment will give you maximum success to select a good ULIP. Remember, proper contact to the proper place and personal required to receive correct information to assess as per the questionnaire.
As a thumb rule, find out the charges of Premium Allocation Charge, Policy Administration Charge, Fund Management Cost of a ULIP for first 10 years and compare the total amount with one year premium amount you are paying. If the 10 year cost is more than 85% of 1 year premium amount, the ULIP is considered as costly.
Insurance: A Guide
"Remember kids, I have life insurance" - Adam Savage
This is a guest article from Tatyana Levin
These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).
The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.
A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed. But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.
Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.
These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason. The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.
The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.
About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com
