ULIP in India: A good concept hit by mis-selling

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Best Ulip Insurance Policy
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ULIP in India A good concept hit by mis-selling
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• Unit Linked Insurance Plan (ULIP) is one of the
  most abused financial products in India now.
  However, ULIP, where you get the insurance and
  investment together, was not a bad word earlier.
• Best Ulip Insurance Policy , as a concept, is a
  major improvement on traditional or endowment
  plans from insurance companies. This is because
  the endowment plans are totally opaque. As an
  investor, you have no idea how much of your
  premium goes for insurance cover or investment,
  where the money is invested, how much is the
  return generated, etc. Though insurance companies
  declare some annual bonus in the middle, it is
  also useless because investors cant withdraw
  these bonuses till maturity.
• The main advantage of ULIP, on the other hand, is
  its transparency. All expenses are clearly stated
  upfront here. These expenses are policy
  allocation charges, policy admin charges,
  switching charges, redemption charges, fund
  management charges, mortality charges, etc.

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• While the fund management charge is considered
  while computing NAVs, other expenses are taken
  care of by deducting the number of units you
  hold. Due to this, the NAV series of ULIP and
  mutual funds are not comparable.
• Investors are allowed to switch between equity
  and debt without any tax incidence in the middle
  and this is the main advantage of ULIPs. If ULIP
  was a good concept, how come it got equated with
  scam? It is mostly because of the actions of
  private insurance companies who launched a series
  of ULIPs that paid very high commissions, which
  varied from 60 to 100 of the first year
  premiums.
• This upfront commission encouraged its massive
  mis-selling and was the main reason to convert a
  good concept into a scam. The arguments put out
  by insurance CEOs now that paying 60 upfront
  commission for a 20-year product is equal to 3
  p.a. is simply wrong. This is because this
  calculation doesnt consider the time value of
  money.

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• Several investors have already lost money to the
  ULIP scam and have deserted the insurance
  altogether. And by this foolish act of
  sacrificing the customer interest, the private
  sector insurance companies have lost their golden
  opportunity to reach out to the masses.
• Though the Best Ulip Insurance Policy has become
  a much better product after the new guidelines,
  the damage is already done. And due to low
  commission now, no insurance agent sells them.
  These agents are now chasing investors with
  safe traditional plans. Hope IRDA will wake up
  to this and reduce the commission for traditional
  plans before it reaches scam proportions.
• The general advice doled out by financial
  planners is to keep investment and insurance
  separate (i.e. term plan for insurance cover and
  mutual fund for insurance). This is the best
  strategy for most investors. However, ULIP is
  still a good product for evolved investors, who
  can understand the maze of expenses charged and
  wade through them.

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