Unit-Linked Insurance Plans (ULIP)

[geniusandinsane]

hello everyone...
i have a doubt i want to buy an insurance for my dad but his age is 55 years and i can pay around 20,000 per anum. can anyone plz tel me which option will be better ulip or term insurance or anyother plan. i cant insure my dad bcoz of age and if there is any tax benefit it will be more useful...i want a policy for 20 years. plz mention some of the insurance policies which will be beneficial......

 

[rajivnc]

Greetings all!!!!
ULIP's take over Mutual Funds in their 8th year even with all the charges levied on them.

I too want to learn how come you reach at this point. I too want to learn about this point.

 

[HariSeldon]

I too want to learn how come you reach at this point. I too want to learn about this point.

I think he mean that from the charges perspective. Which in my view is wrong way to compare. At the end of day you have to see which investment after deducting the charges\cost gives you better return.

In recent days I have seen a trend in media which look like somebody is trying to salvage ULIP with all talks concentrating on showing ULIP is better than MF & term plan combo, but this is done without any supporting data.

 

[rjkr30]

hi friends, this is my first intro-cum-post. I opened icicipru' lifetime' policy in 2006 ,Rs 20k/a and SBI unit plus 2, Rs25k/a in 2008. As i am planning for MFs i want 2 discontinue ulips.should i close the ulips or can i keep them without premiums till they get high NAV say 6 more yrs? (mandatory 3 premiums paid)

 

[SuzzyJakins]

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[cpgupta1201]

Yes, what ever said above is correct. Many of my colleague and my relatives had already become a victim of ULIP plans. This is a really deadly plan. I just regularly and consistently suck our hard earned money. What is even more dangerous about ULIP plan is that most of the persons who already buy it don't even know that insurance agents and company are just looting them. It is not because people are not educated, it is just because how insurance agent has misguided then to get comission. Even if some body knows that this plan is not benefitial, most of the time its too late. After knowing it, we are left with 2 options, either to surrender the policy or to continue. In both cases we have to pay a very heavy penalty, in case of surrender ( surrender charges which is high) or to pay comparatively less charges regularly (which sum up to a big amount if we consider the full tenure of policy).
ULIP policy has lot of charges, some of them takes around 10-12% of few initial investment as charge. If we look carefully at the illustration provided by agent, then is some policy we can easily see how this charge are eating up all our returns and sometime gives negative return even after assuming 8% appreation of fund. Then why some body will invest in this ULIP plans if they are taking so much of the charges. The only reason for this is how insurance agent is miss guiding us and exploiting out financial ill-literacy. There is a nice video on Dont get fooled by insurance agents selling ULIP plans which shows typical convesation that happens between insurance agent in video. In the same video, a in-depth review is also given of a typical ULIP policy. In the video agent's false claim or hidden features of policy which insurance agent mostly hides are shown. At the end, detailed review of the returns and charges is done and compared with PPF. While in the other video

<a href="http://youtu.be/2QEU_e6zMd0" > Every thing you need to know before buying ULIP </a>

, details of all the policy aspect that one need to know before buying ULIP plans is beautifully explained.

 

[Mihir2014]

Unit Linked Insurance policy can be chosen based on three types of risk appetite.

Equity-based ULIPs
If generating high returns is a priority, then you should go for an aggressive equity-based ULIP. The risk here is medium to high depending on the market outlook, but it gives the best returns on investment.

Debt-based ULIP
If you have a lower risk appetite then you should go in for debt-based ULIPs. These invest are in relatively safer instruments such as corporate bonds, government securities and other fixed-income instruments.

Balanced ULIPs
As the name suggests these offers a mix of both equity and debt funds and allow policyholders to use the fund switch feature effectively as and when required. It can used especially for rebalancing the equity-debt allocation as the markets go through various fluctuations. Of course, when maturity nears, policyholders can always switch to the safer debt instruments.

ULIPs are offered by different insurers and the charges associated to them also differ and they follow their own standard fee structures.