I recently saw a post which said ‘Alert Investors already know about ULIPs’. Amazing half truth :).
Once upon a time Arun Shourie said “In India what you say depends on where you sit”. This is so amazingly true – look at the Women’s Bill. BJP says it supports the bill, Congress says it wants the bill passed, but the bill is stuck.
Now about ULIPs! I invested in ULIPs when I could get them at 0.8% asset management charges (Hdfc standard life insurance) and am reasonably happy with the performance. HOWEVER what is now hurting me is the poor performance of the fund – and I realize that I can only surrender it!
However there are enough calculators to show that many unit linked plans are ACTUALLY cheaper than mutual funds in the longer run – say 8 to 9 years. However there is a problem. Imagine if I run a website which survives on advertising – I need page views EVERYDAY to justify the money I charge for advertising. The conflict between advising (which is good for the client) and advertising (which is good for the website) is HUGE. So I have to talk like ‘review every quarter’ be watchful, see your portfolio (it adds no value to the customer)….etc.
So to say at the smart investor, alert investor, …all know about ULIP’s overcharging is the same old story. Keep saying the same old story so many times that people believe it.
However the life insurance companies are plain…..??? what do I say…? they have no web presence or media presence or media clout to make people understand the charging structure. And the teaching should start with finance MBAs, and journos in the personal finance area….sad it will not happen!
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