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.)
