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HDFC Life Insurance has launched a Unit Linked Insurance Plan (Ulip) that is available only online, called Click2Invest. This is the first Ulip to be sold online.
Until now, only term plans were sold online, since they are simple for customers to understand. Investment products, both Ulips and traditional plans, are difficult to sell without an intermediary due to the product structure.
Click2Invest has no premium allocation charges and policy administration charges. The only charges are Fund Management Charges (FMC) and mortality charges. This makes it cheaper than other Ulips and mutual funds, said Sanjay Tripathy, Senior EVP - Marketing, Product, Digital and Ecommerce HDFC Life.
"For a long time equity markets were not doing well and that is why when investors recovered their fund value they redeemed their Ulip units. But in this product 100% of the premium will be invested and hence is better for investors. It is for the informed buyer who is making the choice on his own,'' he said.
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The FMC is 1.35% of the fund value and mortality charge will depend on the age and level of the cover. It reduces over the long term as the fund grows. The mortality charges are also lower than other as compared to normal Ulips for two reasons.
Since it is a new product, the mortality charges follow the revised mortality tables, which have lower rates. Second, the target customer is someone who is from a higher socio-economic group and hence is likely to have better mortality. So, the underwriting is not as stringent.
The plan offers a range of eight fund options to invest in. Another feature is that on maturity, the investor can take the fund value in periodical instalments under settlement option.
After the Insurance Regulatory Authority of India revised the guidelines on Ulips, they have become more transparent than traditional products. However, the capping of charges and rising complaints of mis-selling was why insurance agents had stopped pushing Ulips. By making Ulips available online, both these issues could be addressed to some extent.
