Every where there is a craze that one should not opt for ULIPs - But the real fact is that they are wonderful products provided one stays invested for long term ( At least 12 yrs). Over 3-5 yrs horizon they will be the worst bet due to the front end charges been imposed. These charges are also made so that one should not withdraw in a shorter term. Also there is a discipline that creeps in Savings as no one would like to surrender a life insurance policy & hence any long financial goal namely Retirement (or) Children's Education, etc can go thro' with out any changes. In contrast, Mutual Funds provide Liquidity right from Day-1 & there is always a temptation to withdraw it if the market is very good & a fear if the market is very bad - So thumb rule is opt for ULIPs but only if you are ready to save for long term. For short terms fianancial goals, Mutual Funds are the best & Incomparable ...
RE:ULIPs are good (But only in Long Term)
by Mandar on Mar 22, 2007 05:20 PM Permalink
Sir , it;s not just a craze. Agree with you that customer need to have some dicipline while investing in ULIP. But charges in ULIP are very heavy. With little discipline , customer can save lot of money . Also one more problem with ULIP is after one year you realize that the fund manager of your ULIP is not good, you don't have an option to shift. where in MF , you can go for different fund manager.
RE:RE:ULIPs are good (But only in Long Term)
by Lakshminarayanan V on Mar 23, 2007 09:53 AM Permalink
I agree charges are heavy - but it is too much when you compare it with an endowment type of plan - We are talking about discipline here - But unfortunately Study says 85% of Mutual Fund Investors does not stay beyond 3 yrs & 95% beyond 5 yrs - so where does long term come into picture? Also one more fact is that there is nothing called "Fund Management" as far as ULIPs goes - it is all stipulated & guided by IRDA. And the option to shift in MF if the Fund Manager is not good does not seem to a viable option as you only practically end up trying every fund & does not make money at the end the day. And as such fund managers keep changing every day - they shift to the AMC that pays them more !!! The best way for the investor is to know the fine prints of the policy & to know what is his investment objective ...
