Currently, the share of low-return endowment policies is around 80 per cent
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Hyderabad: Consumers may soon make a shift from traditional insurance products, which typically give low returns, to high return insurance products such as Ulips, says a top official of online insurance comparison portal.
“These (traditional pol-icies) are faulty schemes. With increasing awareness, life insurance products like term insurance (pure protection plan), critical illness, personal accident and low-cost Ulips would gain ground,” claimed Yashish Dahiya, the founder CEO of online insurance comparison portal Policy-bazaar.
Currently, the share of low-return endowment policies is around 80 per cent. However, with the increased awareness about investments, the share of endowment policies will shrink to 20 per cent by 2025, Mr Dahiya explained.
The low returns are attributed to the high costs and various services involved like mortality charges, company’s cost, hedging costs etc. India First MD R.M. Vishakha, however, disagrees. “There is no definition of low returns which can be used as a parameter,” she said.
If a comparison is dra-wn with basic saving products like fixed deposits and savings accounts in banks, it would be unjust as their term generally spans over 15-20 years and the interest keeps adding on to the main sum every year.
However, in insurance, the coverage is only for a year, so one should not expect high returns when comparing with conventional sources of savings. “Also, Ulip, which is being talked about as a better yielding product would also perform adversely if the markets are down,” the India First managing director explained.
( Source : deccan chronicle )
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