Big banks like HSBC in ahmedabad is malpracticing these things since almost 2003 , by selling out the TATA AIG policies . The so called financial advisors (who are crooks) never reveal to customer that how mych they are axed (approx 35 % for first year and 15% for second year).
I am of the firm opinion that all ULIP products from Indian financial market should be closed down.
To the new investors, my advice is to keep the insurance (term-plan) and investment 100% seperate.
As far as financial planners concerned they are not on the investors side, they are more comission mongered at the cost of policy, which they are getting from new investors.
A mature investor will never , never buy a ULIP.
I would ask any one who is interested to workout on both strategy differently and then try to figure out what is worth. I am sure ULIPs are in no way worth.
Maulik Suthar. (Lecturer and Individual investor) Gandhinagar , India
Ha ha again a story to prove that ULIPs are the worst plans and people are fool those who invest. Recently a trend to critise the ULIP plans and promote Mutual Funds is seen in rediff. just consider the UPIPS with the taditional plans that LIC was offering and the returns from those plans, commission passed to the agents and alike issues and think.
as pointed out by the article, if the ULIP companies call there products long term product then they should distribute the charges also evenly..or at least over period of 5-10 years..unlike now when they just want to cash in first two years.
IRDA is just like any regulatory authority. Some banks charge ridiculous fees for basic services and RBI cant do a thing. Likewise SEBI with Mutual Funds. Insurance customers today are more aware and infromed than those of yesteryears. ULIPS are a blessing though the charges are high because of the minimum term of payments. Look at term policies (pure life cover) or endowment policies (moneyback), they provide lower retruns and have longer paying terms. Granted that they encourage saving but for the people of today such long paying terms ,of 15,18 to 20 years, are not enticing options. Yes the comissions are high given to agents.Yes some agents are only interested in sales and commissions alone and yes the allocation of the investment with some Insurance copmanies is high. But consider what benefits you would recieve on Unit Linked insurance plans (ulips)invested in the market for 10 years!! Every 3 years (@30 growth on average) your initial year investment amount doubles! I think the main idea should be to have a forum or platform where the data on growth of the investment is easily attainable. That way investors can track their investment and Insurance companies are compelled to peform, creating healthy competition and lower costs. Investors can then simply choose who is the better business to invest with. At the end of the day the best return on investment wins!
RE:IRDA
by savior on Sep 14, 2007 10:46 AM Permalink
30 growth is not easy to achieve. Maybe in the past it was easy, but now markets are at an all-time high and achieving 30% is not easy.
RE:IRDA
by savior on Sep 14, 2007 10:50 AM Permalink
You are trying to confuse the issue. ULIP is nothing but a term policy Mutual Fund. So investors are well-advised to go in for both separately, instead of going for policies where the premium allocation charge is low. For instance LIC,SBI charge just 3% premium allocation charge for amounts for more than 1Lakh.So you can as well go for LIC,SBI with low premium allocation charge. Bajaj Allianz,Aviva,HDFC and ICICI suck big time, people should be careful of them.
child plus policy sucks. Premium allocation charge is a whopping 18%, %5, %5 for first 3 years so a massive 28% of your premium goes towards premium allocation charges. The agent tells that you have to pay for only 3 years and it runs for 20 years. My friend went for it even though he had all the info. Surprisingly other child care policies actually charged more premium allocation charges than ICICI. IRDA cannot be blamed as long as customers(suckers) buy such fraudulent policies inspite of knowing a lot about the charges. I had suggested my friend to go for term policy Mutual fund(entry load of just 2.25% for all 3 years compared to 18,5,5). But IRDA definitely needs to do more, they have to educated public that ULIPs are nothing more than mutual funds with a bit of insurance thrown in and it is always better to separate the two and go in for mutual funds term insurance.
But In ulip, the premium allocation charge is NOT the only one. So just taking ULIP after checking premium allocation charge is not enough.
You also need to check monthly POLICY ADMIN charge 20 pm from HDFC to 60 for some of ICICI Upto 200 per month in METLIFE, worlds largest insurance company. Yes note that premium allocation is spread over 10 years in metlife at 6% a year, but it is still much much more than entry load in MF. Also check BID OFFER Spread.
But main charge you pay in ULIP , thouch it looks too small but actually most imp is Fund management charge. This is the charge which makes ULIP returns comparable with MFs in long term, 10 or so, because they can be as high as 2.25 % in MFs, but generally come around 1.5 to 2.0%. For FMC in ULIPs Pl do your research, check with ICICI, HDFC, METLIFE, Birla sunlife, BAJAJ CAP etc.
By the way, is there a BEST ULIP is recently banned by so called "Sleeping" IRDA for acturial funding of units, saying it is complex to understand even though high allocation ( still much less than MF)
It is like old but cheaper car that takes lot of fuel, vs new but costlier car that takes less fuel. In long term this balances, and soon you will find new car is better.
RE:RE:ICICI
by VAIBHAV SAMUDRA on Nov 26, 2007 01:00 AM Permalink
What makes ulips most unattractive for me is very few choices available in funds, no sector fund or midcap or index fund etc. Second is passive investing in equity.if Suddenly your Fund stop performing you are stuck. Third is and MOST CONCERNED is RISK or CAPITAL RISK, investment risk lies with the Customer and not the company, your returns mostly are NOT GUARANTEED type. so after 30 years of investment, Insurance company does not have a liability to pay you your investment atlist. even your premiums are not guaranteed. unlike traditional policies. That is why insurance companies can push ulips. ( I am not saying traditional policies are better, I think ulips are simple to understand, better returns and flexible than traditional.)
Wouldn't it be a lot easier if the regulator legally allows all policies to be cancelled within the first month of policy purchase in case the customer wishes to allow escape for customers who feel cheated by their agents upon reading the fine print of the policy?
RE:Way to prevent customer being duped by Agents
by jervis pereira on Sep 14, 2007 10:21 AM Permalink
Insurance companies have what is called a 'free look' period of 15 days after you recieve the insurance policy. In that time you can cancell the policy and get a refund of your investment minus some charges(varies from co.to co.)
Insurance agents are not mis selling the ULIP products. While taking a ULIP policy, policy holders are illeterate to take the ULIP policy? When compared to convention plans (Endowment and Money back plans) the ULIP policy commission is very less. Added to that not only agent is getting commission the development officers also getting commissions that to some ULIP policy (Fortune Plus) the commission is 30% given to development officers and agents getting 6% commission only. Every insurance company has its own overheads i.e. office expenses, staff salary etc. Don't blame insurance companees fooling the public. Think possitive way.
