Everything needs to be read in context. The customer is always free to mix and match different types of insurance with any company of choice. IRDA rules apply to insurance companies. Mr Anil Pannikar needs to recheck his facts.
RE: ULIP
What you MUST know: insurance
by R.A.Krishna on Apr 13, 2006 12:21 AM
Mr Thomas, the value of your ULIP is that in case something were to happen to the policy holder's life, the insurance company would have paid the sum assured to the family. No SIP can deliver that. Further, as I have mentioned, insurance is not an investment. So to evaluate the value of a policy comparison with a SIP is not appropriate. Once again, the insurance agent has to explain the policy properly. Expenses that you mention are partly the premium portion taken for insuring your life. Anyway ULIPs start yielding more only after the expenses are first met. After five years your policy would have grown in value beyond your outlay. You may however, use top ups that directly go into investment sans expenses to increase the cash value or unit value of your policy.
RE: Mr. Prabhu
What you MUST know: insurance
by R.A.Krishna on Apr 08, 2006 09:37 AM
Hi Prabhu,
Thanks. Suggest the following: -
1. Read my article again 2. Understand what I have said 3. Find out particulars from all insurers who offer the product 4. Comprehend that this is a free market and that you must make the choices. So please do the comparison yourself 5. However, if you are in Bangalore and wish to meet me I will be glad to, subject to mutual convenience Thanks
I had invested in sip of a ULIP 8 months back with 2500 prmium every month. After 8 months the value of my investment of Rs 20000. is Rs 16500. about 30% of the prmium paid is consumed for adm and other fixed expences. so only 70 % ofyour premium is invested in units. this fact is not revealed at the time of purchsing the policy.
I had also invested Rs 2500 Pm in a MF sip at the same time. The value of the investment today is above Rs 30000.
Mr. Palekar needs to read what is written with care. What the author says is that a ULIP is like a term plan tied to a mutual fund and not that ULIPs and Term Insurance are being linked. This is just an illustration for people to understand that the sum assured is only obtainable on the death of the insured person (like a term plan) and that there is an investment in the share market with the premia paid (like a Mutual Fund). Why is it that some of us have the habit of jumping to conclusions without reading things with care.
RE:Reply from author
by R.A.Krishna on Mar 22, 2006 07:01 PM
I find that there is some misunderstanding. Since the article is addressed to the consumer and not to insurance companies, it should be evident that I am not trying to alter any product or to link a term insurance to a ULIP. Mr Pannikar is talking of IRDA rules that apply to insurance companies and regulations that govern the sales of their products. But there is no restriction in a customer choosing one or more types of products to fulfil and balance his or her needs for life protection and capital accretion. To this end it is upto a customer to choose a combination of policies that meet these objectives. I have merely delineated the types of insurance products and their features as well as suggestions for the customer using these to best advantage alone or in combination. Is there any law against a customer exercising choice in a free market? None to my knowledge!
Thanks to Anil Pannikar for bringing the Regulations to my notice, although the comment on my being out of tune with times is a little harsh in my view! I am well aware of the regulations and am not trying to change products, which of course, I am in no position to do anyway. The regulations are intended to prescribe what can be offered by insurance companies and what cannot and were brought into being due to misinformation that was going around while selling insurance. What I am suggesting to the reader is what policies can be taken depending on need. And Yes, a ULIP is a combination of MF and Term Insurance features, just as all insurance products are a combination of some features. For instance an endowment is a combination of pure endowment, where only survival benefit exists, and term, where only death benefit is available. I am however, not ready to start a debate on these issues as this would lead me to digress from my objective which is to inform the reader on the choices available. He or she needs to choose a policy or policies that are appropriate for his or her need.
There are several people who know much more than me about insurance and finance which I acknowledge
