Markets to generate wealth in long term: ICICI PruLife

Hyderabad: Despite the uncertainty caused by global trade war and other macroeconomic factors, a top private insurer feels Indian equity markets create wealth for investors in the long run.

“If India’s nominal growth is going to be 10 per cent, the opportunity to create wealth is so much. But the growth would not be uniform. There could be ups and downs. And the markets too would perform similarly. But in the long term, it would beat the inflation and create wealth. For this, you need to have a 10-year or 20-year horizon for investment,” said Sandeep Batra, executive director of ICICI Prudential Life Insurance.

For this, he, however, insists that the investor need to have financial discipline. “When you invest in a house, it may give you great returns because you don’t touch for years. Equity and market linked products may have short term fluctuations. There has never been customers who haven't made money,” he said.

Speaking about savings-cum-insurance products, Mr Batra said Ulips are the most efficient as they are transparent and charges are minimal.

“If you are using insurance for long term investments, Ulips are the best. If you are risk-averse, you can have 80 per cent debt or 100 per cent debt. Over a 10-year period, you will get good returns,” he said, cautioning investors against getting euphoric or scared due to market movements.

Ulips, however, have a long way to go in India as they make only 15 per cent of savings or investment products in the insurance sector. Endowment policies constitute 85 per cent of this market.

This, Mr Batra said, is gradually changing as youngsters are preferring Ulip products over traditional endowment policy. “Youth is a little more aware person. He knows that equity markets fluctuate but can create wealth.”

While agreeing that there has not been major path breaking innovations in the insurance product offerings, Mr Batra claims that life insurance products must be simple for people to understand and are bound by regulations.

He, however, said that his company has a health cover product that cover 34 critical illness — which is a risk coverage policies and not morbidity-based ones.