Recently, we came across a person who was mis-sold a ULIP. Yes, mis-selling of ULIPs still continues. This lady got a call from her insurer, a reputed private sector insurance company, she was told that the ULIP she had purchased earlier was not performing well, and the company is discontinuing it. The company suggested that she should buy a new ULIP with better prospects. The lady fell for it and completed all the formalities as directed by the agent. But she was shocked when her bank account was debited with Rs 1 lakh, the premiums of both the insurance policies. In short, the first policy was never discontinued.
When she reached out to us through a friend, we advised her to stop her ULIPs. We told her she might lose most of her premium she paid for the ULIPs, but she would be still better off if she invest in a mutual fund. However, the lady was not ready to discontinue her ULIP investments as she was scared of losing her money.
Are you in a similar situation? Do you want to get out of your bad ULIP investments, but not convinced how you would be better off by investing in mutual funds, even after the reintroduction of long term capital gains (LTCG) tax.
Here we have tried to illustrate how it makes sense to surrender your ULIP which was mis-sold to you and invest the money in mutual funds.
We have taken two unit linked plans - from ICICI Pru Life Insurance and HDFC Life - for illustrative purpose. We have compared how investing the same amount in mutual funds works. The ULIP illustration was created using the insurer's calculators. We have taken mutual fund performance at same rate of 8 per cent as well as on 12 per cent and 15 per cent. See illustration below:
The table clearly shows that mutual funds win. If we look at the life insurance of Rs 6 lakh offered by the ULIPs, It is clearly not enough to take care of the financial need of your family after your death. If we look at a pure term insurance cover of Rs 25 lakh life cover, four times the sum offered by the ULIPs, it will cost only around Rs 300 per month. If you invest the rest of the money in a mutual fund scheme, you would still make Rs 8.44 lakh (at 8%), Rs 15.83 lakh (at 12%), and Rs 17.74 lakh (at 15%).
Mutual fund advisors say that liquidity in ULIPs is the main concern apart from the returns and the modest insurance cover. If a unit linked plan under-performs, you cannot move to any other plan conveniently. It is not the case in mutual funds. Also, if you need your money, you can easily redeem your mutual funds as against ULIP where you have to understand the terms and conditions
ULIPs are a long term product of, say, 10 or 20 years, and you cannot stick to one fund manager throughout the long term, say advisors. in ULIPs, you are stuck to a fund manager. Management risk diversification is missing in ULIPs
SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds
For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300
Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...
Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme. But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
