Ulip - A Boon or Bane?

Posted by animesh on July 13th, 2017

Insurance was started by seafarers insurance as we know it today owes its existence to 17th century England. In fact, it began taking shape in 1688 at a rather interesting place called Lloyd's Coffee House in London, where merchants, ship-owners and underwriters met to discuss and transact business. By the end of the 18th century, Lloyd's had brewed enough business to become one of the first modern insurance companies. It started as a noble endeavor to safe guard the interest of its members it was a non profit institution.

To day after private companies got into this noble field insurance is not being sold for its original cause that is as a hedge against investment. Insurance companies are promoting it as an investment show casing tall claims of growth and the profits that can be made. Insurance that is unit linked polices can never be an investment because of the high expense in the first 5 years. Some of the companies deduct 20 to 35% from the first year's investment, 16 to 20% in the second year.

With this kind of deductions how can unit linked insurance be a good investment. If you are looking out for a good investment mutual funds are a better choice as the expense is just 2.5%. So before investing in ulip products follow the saying look before you leap.

If you are looking for risk cover you can take a traditional policy from these companies itself which will be much cheaper. As far as tax benefits are concerned if you invest in any of the tax saving instruments you will get more benefits than in Ulip Insurance as half of the benefits you derive goes towards there abnormal charges.

I have nothing against insurance companies what I am concerned about is that none of the companies are talking about insurance but only about investment which is not healthy I think it is high time IRDA put its foot down and reminded the companies what there main objective is.

Another sector which is causing great concern is recruiting of advisors, because of pressure from the top management unit managers recruit any person who falls for there talks they do not access the capability of the person. The poor fellow joins writes and passes the exam and finds that after he finishes joining his close circle like his father brother brother-in-law and a few friends he runs out of ideas and slowly fades out. They join seeing the adv in papers which say that you can earn 10000 to 20000 as financial advisors. In reality only 10% of the huge force of advisors in the country make a above average living, all the others earn a max of 2500 to 3000 a month some even lower.

My request is the company should make a very proper assessment of the person to see if he has the stuff to become a good advisor and some rule should come into force which allows a unit manager to take in new people only when all his existing advisors earn 3000 or more. If such a step is taken they will be more careful in recruiting new comers.

Something has to be done before a Noble profession becomes another money making scheme for its promoters. I am a advisor with one of the companies but am not under liberty so disclose the name of the company I am associated with.

I am Involved in outsourcing home based on-line projects and web designing, through these articles I would like to share what I have learned with the rest of the members.

Source:- http://bit.ly/2tiCeSB