Posts Tagged ‘ROI’

ULIPs to be Commission Free after April 1, 2011 :)

ULIPs to be Commission Free after April 1, 2011

ULIPs to be Commission Free after April 1, 2011

Those investing in Unit Linked Insurance Plans (ULIPs) are set to be secured of this burden of paying commission after April 2011 even though consumers buying pure-life insurance products will have to go on paying commission to sellers of these policies.

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However this is said :

– to help improve returns to investors in ULIPs,

-curb mis-selling and

– help raise insurance penetration by having a modest commission on pure insurance products in turn creating incentives for sellers.

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Further, it will also pave the way for a load-free regime on most financial products after April 1, 2011.


Moreover, the suggestion to cut commissions from the policy-holders” premium is against the insurance regulator IRDA‘s demand to keep the existing structure intact
while agents are entitled to get a commission of upto :

– 40% of the premium in the first year,

– 7.5% in the second year and

– 5% in the third year and thereafter.

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Further, if the panel”s proposal passes muster with the HLCC, upfront commissions embedded in the ULIP premium will be cut to 15% by April and 7% by October next year.

While, ULIPs will be load-free by April 1, 2011 just like mutual
funds and pension products under the new pension scheme
and insurance companies will help their agent”s transit to a
fee-based model instead of a commission based model.

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Additionally, sellers of term insurance products with pure lifecover sans investment will have to reconcile to lower commissions which will be cut to 5% of the premium after April1, 2011 and will continue till penetration reaches the targets set by the government.

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