Affinity of investors to park money in unit-linked insurance plans (ULIPs) has gone up during the coronavirus pandemic, mainly because of flexibility to manage the funds, according to a survey report by Bajaj Allianz Life Insurance.
The insurer said two out of three Indians intend to invest in ULIPs in the coming year. As many as 92 per cent of the respondents said their affinity towards ULIPs has increased after the first wave of the pandemic.
The ULIP insurance policies offer wealth creation alongside life cover. Part of the premium goes towards life cover and the rest goes towards a fund that is invested in equity, debt or a combination of both.
Bajaj Allianz Life said its survey showed affinity for ULIPs is higher in non-metros (67 per cent) and among mass-affluents (66 per cent) as compared to average Indians.
The Bajaj Allianz Life survey was conducted in association with NielsenIQ, across metros and non-metro in India with a sample size of 499 respondents. It covered Mumbai, Delhi, Kolkata, Bengaluru, Surat, Patna, Lucknow and Indore. Conducted through online self-administered survey targeting, the survey included males and females in the 21-50 age group.
For the affluent Indians, ULIP is attractive because it offers ease of tracking of investments, low-cost structure and convenience of adding rider or top-up, and withdrawal of money, according to the survey.
Middle-income Indians seek the facility of partial withdrawal in ULIP. More than one in three middle-income Indians rate this as a key feature in ULIPs. For more than 50 per cent mass-affluent Indians, guidance of experts in managing funds is a key feature in ULIPs.
As for the younger investors in the 21-30 years age group, SIP (Systematic Investment Plan) was found to be the most-preferred mode of investment and a key feature for investing in a ULIP.
Besides, over 50 per cent of investors in the 40-plus age group considered lump sum investment options as a key feature for investing in a ULIP.
Most of the investors identify zero-cost fund switching as one of the key differentiating features in ULIPs compared to mutual funds. And, more than 50 per cent customers perceive dual benefit of insurance and investments in ULIPs and low-cost structure as key differentiators for ULIP, as per the survey.
Bajaj Allianz Life Chief Marketing Officer Chandramohan Mehra said, "The survey indicates high affinity towards ULIPs across customer profiles of age, income and geography. The key purchase triggers towards ULIP include its potential to deliver higher long-term return, flexibility to switch funds or withdraw, and added benefit of life insurance cover." He added that customers rate life insurance as one of the most-preferred investment instruments to achieve their long-term life goals.