Great Five Year Investment Product — The New Synonym For ULIPs

by Vinaya HS on October 17, 2010

in Finance

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When you hear the words “five, years, investment, product” all in the same sentence from whoever is pitching you a financial product your first instinct must be to get ready to run as fast as you can in the opposite direction.

Because it couldn’t be anything other than a ULIP.

Last weekend, I ran as fast as I could in the opposite direction. Someone who D’s dad knew at work tried to peddle a “great five-year investment product.”

Perhaps this is the only timeless financial advice: Don’t buy a ULIP.




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{ 7 comments… read them below or add one }

pattu October 17, 2010 at 1:06 AM

Don’t buy a ULIP

This seems to be blind advice given by young personal finance enthusiasts
Shubra seems to think ULIPs are not for everyone but are not bad compared to mutual funds etc. He himself has a ULIP.

The better advice would be to research every product and choose if it suits you.

Vinaya H S October 18, 2010 at 2:22 PM

@pattu:

Not sure how a ULIP can be good for anyone — unless you’re ready to voluntarily make someone else (agent/insurer) rich. And it’s not blind. My wife herself has a ULIP (taken way before marriage). I’ve studied the thing in and out and I’m amazed at how much money she’s lost and how much money the agent/insurer has made.

pattu October 18, 2010 at 11:08 PM

Take a look at this video
http://www.youtube.com/watch?v=ZdFo2Svv9CE&feature=player_embedded#!

around 3:45 secs

If I had to choose one person to get financial advice from it would be Shubra.

Vinaya H S October 19, 2010 at 11:44 AM

@pattu:

The advise given is to choose a ULIP with fund management charges less than 1%. But what about those horrendous premium allocation charges and policy administration charges?

Wouldn’t a pure term plan plus a a pure index fund (with low tracking error) be a better choice?

pattu October 20, 2010 at 10:28 PM

Yes I see your point. What Suhbra is saying is in the long run both should perform about the same. As an informed choice what you say would be better than an ULIP agreed. However it can work for someone who can manage fund allocation.
So I would prefer Dont buy ULIP* blindly.
* Anything for that matter.

Anoop October 21, 2010 at 11:23 AM

Well I wouldn’t run away from them, I would rather tell them this ” I will invest if you take responsibilities for 95% of the risks involved”, I am fine in investing.. I am sure they will run away in the opposite direction…

Vinaya HS October 21, 2010 at 11:46 AM

@Anoop:

Or maybe you could ask them to show some proof of their own money being invested in a ULIP.

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