I am not writing one more word on should you buy a UL or a MF product. Enough has been written in the world about this, right.

I was just trying to see how both the regulators are looking at the products.

1. ULIP sellers can make a policy illustration: It is mandatory that the person selling a UL plan MUST make a policy illustration – how the fund will look 30 years later.

The Mutual fund industry thinks it should NOT make projections in order to sell the product. So mutual fund agents will give you vague answers.

Of course the MF industry’s approach is correct. When a policy illustration is made, it is ACTUALLY a cost illustration, NOT a projection – but who has the time to explain all this?

2. Amitabh Bachhan, Sachin Tendulkar, Rahul Dravid can all sell life insurance – and fairly obviously ULIP but the SEBI says celebrity selling of mutual funds is not allowed. Period. No great reason, but not allowed.

3. The ulip commissions are still in double digits, and has recently become a value based trail – just like the mutual fund industries. However it is far, far more profitable to sell life insurance vis-a-vis  mutual funds.

The regulators frankly do not care how the sales happens…

there could be more…will do as and when…

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  1. you missed one – ULIPs need not share the fund performance before you buy, but MFs have to even tell the number of shares owned 🙂

  2. I have an interesting experience regarding ULIPS. Was approached by my Bank RM to sell Product A of an Insurance Co. Was also approached by my Broker RM to sell Product B of SAME Insurance Co. Both Products have same underlying fund options. Exactly same. But Bank RM ‘proved to me’ that Product A was better and Product B was worse. Broker RM also ‘proved to me’ that Product B was better than A!

    Bank RM also ‘proved to me’ that Product A was even better than a mutual fund, since the ‘effective’ charges were below usual equity MF expense ratios. Broker RM ‘proved to me’ that Product B is better than ANY equity MF since it is a ‘guaranteed NAV’ product and the Insurance Co. MUST pay me that amount.

    I have 2 illustration sheets from Broker RM which shows clearly the benefits with 6% return and 10% return. Actual return on the 6% sheet is below 4% and that on the 10% sheet is below 7%.

    One way to stop ULIP agents from chasing us is to find an actual fact/problem with the product/calculation, but don’t tell them right away. Tell them you don’t want the product. Then if they ask you why, tell them you will say later. Finally after a few days, tell them that you’ll tell them why you won’t buy the product on one condition only. That they stop asking you to buy it ever again. Confirm twice, that you will not be asked to buy after hearing why you don’t want to buy. Then finally tell them the reason and end the conversation. Works every time. Next time onwards they call, you have the upper hand, since you’ve clearly taken their promise not to be bothered again with the product.

  3. Hi,
    A very interesting note. Gives some striking reasons whereby even the regulators are not bothered to hunt down the ULIPs which are being sold as investment options (Oops missed the word ‘Attractive’). My experience from western country shows me that ULIP kind of products which mix investments and insurance do not exist ! It is probably India’s USP (Unique Selling Point) to have such products. It is not wrong if I meniton that ‘ULIPs are not bought, but they are sold’ or missold.
    I did a small analysis myself whereby I attempted to build a customised product in lines with ULIPs, without touching any ULIP based investment. The result was in line with expectations – ULIPs are an utter waste of resources. If you have time, you may want to vet my analysis at http:/ /insight.byanfa.com/?p=348.


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