Sebi has dropped TER. Obviously now the guys getting Rs. 25L a month and working as RM can no longer afford to sell mutual funds. So you will be told the following…
- Ulip is tax free. (permanently for the next 100 years I hope)
- Moving from equity to debt or vice-versa is tax free and easy (all clients know market timing of course)
- Charges are lower than 2% of mutual funds (bull shit Hdfc sensex etf is .05%)
- Irda definition of “large cap” are stricter (hey indexing solves that believe me)
- It has an auto mode of investing – based on age (aww bull shit a guy who knows switching needs this??)
- It has a waiver of premium advantage (hey Joker Term plan is supposed to handle this, right?)
- Online Ulips are comparable because charges are similar (nonsense the term insurance charges are still different)
- On an average Ulip category performance is better (how many times have we heard this!!)
- Ulip attracts better talent (oops show me please.
What they will not tell you (and you should ask):
- why is the term insurance cost higher in the early part?
- why is it LUCRATIVE for the online sales guys – what am I missing there?
- why is the premium so high in the later years (oops rising premium with age is it?)
you can throw a term insurance away when you don’t need it
you cannot port a fund – you are stuck to a bad fund manager
Broadly – there is nothing that stops you from investing for the long term in an index fund. Stick to a term insurance.
A new type of Ulip is being hawked nowadays – it is obviously very profitable for the issuer. It ties you up for a very long time with a poor product that you don’t need.
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