Mkt volatility may force life insurers to rethink ULIP plans

A prolonged volatility in the stock markets could dampen the investor appetite for unit linked insurance plans (ULIPs), prompting life insurers to shift the focus towards guaranteed income and pure protection plans like term insurance, industry experts said.

- NARAYANAN V

A PROLONGED VOLATILITY in the stock markets could dampen the investor appetite for unit linked insurance plans (ULIPs), prompting life insurers to shift the focus towards guaranteed income and pure protection plans like term insurance, industry experts said.

ULIPs, which are market-linked insurance products, offer a combination of life insurance and investment opportunities. A portion of the premium is allocated to the life cover, while the remainder is invested in equity or debt funds, making them attractive during bullish market phases.

HDFC Life Insurance MD and CEO Vibha Padalkar has highlighted the strong correlation between ULIPs and the stock market performance. "Over the past one-and-a-half decades, I've observed that if the market remains volatile, the sheen tends to come off ULIPs with a lag of 9-12 months. That's how it will likely pan out again."