Shikha Sharma Managing director ICICI Prudential Life Insurance |
R Krishnamurthy CEO SBI Life Insurance |
Stuart Purdy Managing director Aviva Life Insurance | |||
| Should one go in for traditional or market-linked plan? | Worldwide insurance is used for retirement, pure protection and to meet financial goals. Choose on the basis of need and financial goal. Market-linked plan would call for the customer to be financially savvy. For others traditional plans would be preferable. | The traditional type of products are more popular because of a middle class with a frugal mindsetthey do not wish to take risks. We, as insurers, manage a big pool of funds and offer returns that are in lines with what the market rates are. | Our experience has shown that people are looking for products that can be easily understood and offer transparencyall these are offered in a market-linked plan. We offer all our products on this platform and they are all doing well. |
| Which is better? | Market-linked plans over the long term can earn more when compared to traditional plans. Traditional plans do well because of their legacy , but are not as well received in the diminishing assured return scenario. We see a tilt towards the market-linked plans over the next three years. | We would be coming with our market-linked plans later this year, but our traditional plans are doing extremely well. It would take some maturity for customers to adapt to market-linked plans. I feel both these platforms are for different class of customers and they can co-exist. | We started with market-linked plans but also offer traditional policies, which are again unitised. These declare a minimum guarantee at the begining of the year and at the end of the policy tenure the profits are shared with the policyholder. Unit-linked is the way ahead and is not as risky as a mutual fund. |
| Isnt a pure term policy the best? | Yes, there is significant growth in this product categorywhich could be due to increasing asset building, which is mostly financed; term insurance acts as a guarantee in case one dies. But, based on ones financial goals, the product and the way it is designed would vary. | Yes and No. To be able to recover an inflation-balanced return, a pure term may not achieve the goal. However, it is something to start with and build over time, if you have a flair for earning better returns from other financial instruments. | Market-linked plans work in a way that your risk cover is basically like a term policy and your investment component of the premium is what goes into the investing fund, so market-linked plans are basically term-plus plans. |
