IRDA, the insurance regulating authority has just approved the ULPs- Universal Life Policies for Bharti Axa Life Insurance and Max New York Life.

Its an interesting development in our opinion because of the inherent nature of ULPs.

Here are few of the salient features

1.Customers have flexibility in premium, sum assured as well as the tenure of the product.

2.Freedom to vary the payment of the premium over the policy’s life- you can start with monthly payments, switch to annual then quarterly and so on. What does not change is the premium quantum.

3. Also the policy is not automatically cancelled even if the customer fails to pay the premium. Even if the lapsed payment is not made , the ULP will be kept in force- what does change is the sum assured at the time of payout.

4. Unlike unit-inked insurance plans (Ulips), ULP holders cannot choose the investment option. The investments are at the discretion of the companies. The customers will also not know their asset value as it is not an equity investment and no net asset value will be declared.

We feel that given the high percentage of policies that lapse each year, ULPs will find a high focus at Life Insurers.For consumers also its advantageous with flexibility in payment terms and the guarantee that the polciy would not lapse.