What is ULIP
Read before buy ULIP
Mutual fund vs ULIP
Read ULIP FAQ's
Today I am showing some negative fact of ULIP, If we want to make money then we need to take some risk but there are some hidden factor of ULIP.Before investing investor must know about the hidden field of scheme.
This are some hidden factor or disadvantage of ULIP
- It is not a full insurance, remember in life that insurance is not an investment.If you want to make money then invest money but it is difficult to earn money using insurance.If you want to earn more then Keep your investment and insurance separate in life.
- Charges are high, In ULIP you have to pay high charges so it is another disadvantage.
- Investment track record is not fine : While most insurance companies have come into India post 2000, how well can they handle money while investing in markets is something to be seen over a long term period. Not to undermine their potential, but it would be difficult to convince myself to give my money to somebody who is new to me rather than someone(Mutual fund companies), who has been in this business for 10-20 yrs in India and has demonstrated the capability to give consistent returns.
- Before investing in ULIP compare it with different insurance companies.
Means ULIP work for long term so if you are thinking for short term profit then don’t invest in ULIP. One more point if you are investing in share market using ULIP then you are on wrong way just use mutual fund SIP for investing in share market.
For more detail Read advantage of SIP.
So it is not an issue profit and loss are available every where at same time. Every coin has two faces. It is about your need. . So identify your needs with a financial planner and then pick the product suitable for you.
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Read treading rules before investing.
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comments
4 Responses to "Hidden factor of ULIP"Hi shakti
Your Blog's been very useful - great work! Like many here, I am one of those young professionals new to the world of investing (even earning for that matter :-))and am just starting to learn a bit about it.
I would like to thank you for all the light u have provided on ULIP's...my financial background is zero :( , This helped me a lot. I'm early awaiting for ur article on Basis of Investment.. hope it comes out soon!
can see that u are not in favor of ULIP's
Plus Points of a ULIP
1. Though it is being advocated to surrender the Unit linked investment plan (ULIP) but each coin has two sides and we must have the other side of story before making a decision in haste and same is listed below:
2. Each surrendered ULIP policy gets a surrender charge levied.
3. ULIP helps to achieve the goal planning like child marriage or education ets.
4. It makes saving a cumpolsory habit.
5. One has the option to determine the risk profile and choose between balanced, liquid and debt funds.
6. Debt oriented ULIP take greater time to break even the cost.
7. Equity fund can be flavour of the year as stock prices are down.
8. One has the option to switch between equity and debt and vice versa and one has the option to make use of this option as and when market goes up or goes down.
9. ULIP has to be considered for minmum 13 years as historically it has been proved that ULIP gives better returns than mutual funds but if kept for greater than 13 years (excluding mortality charges).
10. Thus you now know both plusses and minuses of ULIPs and thus consider before closing a ULIP. However it is advised not to open new ULIP accounts.
By Sriman
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