Unit-Linked Insurance Plans (ULIP)

[Mr_Market]

Originally Posted by ravalsb

Mr.Market,
ULIP's option of fund swithc only makes sense, if exercised at market 21000.After collapsing to 14000 there is no point switching fund, unless we are to see further downside. Same applies to MF. We can always redeem our MF units @21000 if we can call the top.

However, benefit in later is that in situations like this, we can discontinue adding units (partly/fully) to exisiting MF and allocate our money to new funds, based on valuations.

For ex. Suppose we had invested in power and infra sector funds in last 2-3 years, we can carry those units for long term and switch to real estate and banking sector funds based on thier reasonably cheap valuations. This is just for the sake of example as we may see NFO coming in this sector, especially after economic reforms.

Hope this helps.

Regards

Dear ravalsb
do you think a common man (aam admi) understands what is NFO, infra sector fund,real estate etc.ask some one what is NFO and I am sure 8 out of 10 would say don't know .According to me ULIP is simple the insurance advisor comes at your door step .You choose growth,balance or bond fund according to market conditions.Even villagers have learn t to send sms and know where is sensex trading.If it is falling the person goes to nearest Insurance branch gives an application ,writes a simple line that my policy number is so and so change my fund to bond fund and the next day his fund is changed .otherwise he just phones is insurance advisor whom he had given an application in advance for fund change ,to do so.
and when sensex rises he has again to give another application for fund change .
the popularity of ULIP is due to its simplicity.market rises go to growth fund market falls go to bond fund ,it is not necessary that you have changed it at 21000 if you have changed it at 18000 it's Ok.
I have seen people who do not know any thing about MF,ULIP or stock market earning better than an expert.

[Vicky78]

Originally Posted by Mr_Market

Dear ravalsb
Market has slipped from 21000 to 14104 .What option do we have in such conditions in mutual funds ,as there is a facility of fund switch over in ulips.

in a mutual fund you can switch to debt funds within the same fund house. (if thats what you mean by switch over in a ulip)

[Vicky78]

Originally Posted by Mr_Market

the popularity of ULIP is due to its simplicity.market rises go to growth fund market falls go to bond fund ,it is not necessary that you have changed it at 21000 if you have changed it at 18000 it's Ok.
I have seen people who do not know any thing about MF,ULIP or stock market earning better than an expert.

The very idea that people have time the market and churn thier assets makes ULIP a bad product. A lot of money can be lost in that approach. They are either too early or too late.A SIP with strategic asset rebalancing is a better option.

A good trading strategy is mostly a bad long term investment strategy. A long term investor need not have to panic and move into cash with every drop in the sensex. What matters is the amount of time the investor stays in the market and takes a disciplined approch of investing regularly in small sums. The cash portion held is for the short term needs of the investor while the equity portion is for the long term needs.

Aam Admi: if the ULIPS are easy for the common man by monitoring the sensex and churning assets then equity mfs are a piece of cake. The aam admi need not have to know the sensex movents at all. Simply sign up for SIPs in debt & equity funds with a good long term track record.Evaluate their funds against the benchmarks once in 6 months, rebalance assets once the equity portion goes above a set value.

All this with less cost compared to ULIPS.

[ravalsb]

Originally Posted by Mr_Market

Dear ravalsb
do you think a common man (aam admi) understands what is NFO, infra sector fund,real estate etc.ask some one what is NFO and I am sure 8 out of 10 would say don't know.

Yes you are right. They can only undrerstand "ULIP", "EQUITY FUND", "DEBT FUND", "INDEX FUND", "RISK PROFILING", "PAC", "FMC", Other admin charges, Calculation of Surrender charges, charges for switching funds and thier detailed workings and their bye-laws for claim settlement at various internvals of policy term. Ofcourse, they cannot understand MF (i.e. Mututal Fund if anyone here didnt understand).

Originally Posted by Mr_Market

According to me ULIP is simple the insurance advisor comes at your door step .

According to me trading in markets is very simple as i have to only call my broker or just trade online. Is ULIP simple because insurance advisor comes at door step? MF advisors does the same.

How it differs from MF?

Originally Posted by Mr_Market

You choose growth,balance or bond fund according to market conditions.

Mutual Funds dont have these funds?
Good to know common man can also understand Market conditions, but not MF.

How it differs from MF?

Originally Posted by Mr_Market

Even villagers have learn t to send sms and know where is sensex trading.

So,that is good. That helps them invest in diverse asset classes and it also covers MF.

Originally Posted by Mr_Market

If it is falling the person goes to nearest Insurance branch gives an application ,writes a simple line that my policy number is so and so change my fund to bond fund and the next day his fund is changed .otherwise he just phones is insurance advisor whom he had given an application in advance for fund change ,to do so.
and when sensex rises he has again to give another application for fund change .

That is a standard process worldwide for any fund you name it.

How it differs from MF?

Originally Posted by Mr_Market

the popularity of ULIP is due to its simplicity.

ULIP is not popular because of simplicity but because it provides insurance along with investment.

However, let me clarify here that in many ULIP's Death Benefit = Sum Assured or Fund Value whichever is higher. So beyond certain policy term, fund value is bound to be more than sum assured and thus mortality charges paid so far becomes opportunity loss.

Originally Posted by Mr_Market

market rises go to growth fund market falls go to bond fund ,it is not necessary that you have changed it at 21000 if you have changed it at 18000 it's Ok.

Thanks for sharing investment strategy. I am obliged. But what is the point in changing from Equity to debt after falling from 21000 to 14000? and if you can call the top..same applies to MF.

How it differs from MF?

Originally Posted by Mr_Market

I have seen people who do not know any thing about MF,ULIP or stock market earning better than an expert.

If that is so then such investors are indifferent in selecting between ULIP, MF or stock, since they know nothing about any of these products. This brings us back to your first statement which states

Originally Posted by Mr_Market

do you think a common man (aam admi) understands what is NFO, infra sector fund,real estate etc.

.....now does it really matter, atleast to these lucky ones?


and as far as experts earnings are concerned, i dont know, 'cos unfortunately i am not one of them. May be experts earn from fees they receive from these ppl who know nothing abt ULIP, MF and stocks...and these experts also includes Insurance Advisors

[Dr.A.S. Kapoor]

Dear Sirs,
My ULIP date of maturity was 24.07.2008, but till date I have not received the cheque . The detail of this is given below:
Name Dr. Amar Singh Kapoor
Address Department of Plant Pathology,
HPKV palampur, District Kangra H.P.,
Pin-176062
Memebrship No. = Ul9840431000138
Date of joining the plan 24.07.08
Please look in to the matter and send the payment immedietly.
With best wishes,
AS Kapoor

[ravalsb]

Originally Posted by Dr.A.S. Kapoor

Dear Sirs,
My ULIP date of maturity was 24.07.2008, but till date I have not received the cheque . The detail of this is given below:
Name Dr. Amar Singh Kapoor
Address Department of Plant Pathology,
HPKV palampur, District Kangra H.P.,
Pin-176062
Memebrship No. = Ul9840431000138
Date of joining the plan 24.07.08
Please look in to the matter and send the payment immedietly.
With best wishes,
AS Kapoor

Dear AS Kapoor,

How can Joining and Maturity Date be same?

Secondly, for redemption, you will have to give request to the respective insurance company.

Hope this helps.

Regards

[2fast2furios]

as a rule of thumb DONT invest in ULIPS for investing purpose . it is better to invest in MFs which have lower fees but charges charges under ulips are as high as high as 30 percent of fees within the first 3 years though if u have already taken the plunge it is better to keep investing as after 3 years the charges are quite less. apart from that if u want insurance it is better to go for term insurance which is cheaper and for investing go for any well diversified MF. hope this helps.