Please do not mix investments with insurance. Also, if you want to take insurance, then go for term plans and not endowment. If say the premium of Endovement plan is 40000/- pa and for term plan is Rs 10000/-. Then take a term plan and invest the remaining 30000/- in MFs. The term plan gives much more coverage than endowement. In this way, you will have both insurance as well as investment in your portfolio. Another advantage of MFs is that the money in MFs is almost liquid i.e you can encash as and when required with maximum 3-4 working days to receive your money. No need to produce any proof or reason just encash whenever you are in need of money. Where as when it comes to insurance, everyone knows how difficult it is encash during emergencies. Go for MFs, ULIPS make only the agents rich, the investor does not gain much. MFs are mostly win-win for both investors as well as fund houses/agents.
ULIPS is a lost concept - where people will invest and get insurance as well - an extremely bad proposition.
Other issues : 1/ The commission paid to the agents is very high and actually comes out of the ULIP performance. The underlying funds need to account for such expenses and in turn give out a return much lower than the Mutual Fund. 2/ ULIP internal investment is not transparent. Mostly to keep the point 1 - where the costs are very high. 3/ Though ULIPs provide for switches across the funds of the same AMC - it is very difficult for the customers to time the switch. 4/ The agents generally sell the ULIPs - based on their own commission and not based on the past returns. 5/ Lock in period is high.
