ULIPs can't be without catch. It's purpose is financial secuirty and not investment. Hence there has to be some catch which you haven't seen yet. Let me show you!
SBI Smart promises highest against blah blah navs. What it do is I'll explain by an example. Suppose they have 10 bucks. They will put 5 in bonds, secured debts etc and 5 in equity. Now as and when 5 of equity becomes 5.01, 0.01 will go to a fund called Daily Protection Fund. And now comes the catch!
You can very well surrender policy any day after 1st 15 days free lock-in trial preiod.
But only after deducting charges which I'll be quoting too and
with a clause that the total benefits after charges shall be locked and will be given 3.5% P.A. simple interest for time frame of 5 years total of policy! You can take money out only after 5 years.
If you gave 100 bucks you get 10 units, charges comes out to be 25 (approx) in 1st year for which 2.5 units are deducted and if on surrender nav was 11, you'll have 7.5x11=82.5 locked for 5 years on which simple bank deposit rate will be paid. Now more horrendous part which most people don't see while taking insurance if there aim is investment! The charges -
Premium allocation charges : 15% in 1st yr, 5% for next 2-4 yrs for 3-5 yrs terms respectively.
Admin charges – Rs 60/- per month for full term.
For first three years, annual administration charges of Rs 5 per 1000 of sum assured.
Fund management charge 1.5% pa. Fund management charge can be increased to 2.5% pa
Mortality charge levied on 1st day of each policy month.
Now take your call.