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My interest in this ULIP stemmed from an ad I saw in the morning newspaper. 0% allocation charge. 100% premium invested. That too for a ULIP? Seriously, there’s got to be a real catch somewhere. And there are — quite a few of them.
First-up, a Policy Administration Charge that seems to be equal to 6% of the premium paid (i.e. 3,000 for a premium of 50,000; 6,000 for a premium of 100,000). Really, WTF? Why on Earth should the Policy Administration Charge have to vary with the premium paid? It’s not as if the administration work involved suddenly shoots up just because of a higher premium — in fact, I’d really expect it to stay fixed. That’s not the end of it. There’s a Risk Benefit Charge — whatever that means! There’s also a Fund Management Charge. To cap it all up, there’s also a Service Tax on All Charges.
Do you see the trick? There’s nothing called an “Allocation Charge” but its absence is more than made up for by all these other charges.
From the calculator on the site:
I tried hard but couldn’t figure out how this mumbo-jumbo is being generated. What’s more, there’s also a charge labeled “Commissions” (not seen in the figure above; it’s to the extreme right of the table generated by the calculator and it’s honestly easy to miss). Whose commissions? WTF?
Maybe, “Future Destruct” would be a better name for this policy.
My advise: “Stay away.” In fact, if someone tries to sell this policy to you, run away as fast as you can in the opposite direction. And don’t look back.
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