ULIPs and Traditional Plans are the best products for ………

Posted on December 21, 2010

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“Ohh !! Did I log on to a wrong page?? I always thought this space talked about the drawbacks of ULIPs and Traditional Plans (Endowment, Money Back etc) by explaining their failure to address insurance as well as investments. So how come they became best all of a sudden??” these might be the thoughts coming to the readers’ minds who have been visiting this space for quite some time now.

However, some people keep asking me that “if ULIPs and Traditional Plans were so bad, then they would not have existed in the market for so long. There might be ‘some’ people for sure, for whom they are good.”

I said, “Ok, let me do some study and find out, which could be those people for whom ULIPs and Traditional Plans could be good”. Below, I have tried to identify a few groups those who can be benefitted a lot from these. Please see if you belong to any of the below groups. If yes, then ULIPs and Traditional Plans are the “Flavour of the Season” for you.

1. Insurance Companies

If you are a insurance company (whether promoter or employee), then you have to make sure that you always keep talking good about ULIPs and Traditional Plans. Because these are the products in which your company can deduct high amount of charges and earn a lot. Only from these earnings your fat salaries, lavish offices, fat bonuses and foreign trips can be funded. Just selling term plans might be beneficial for the clients, but not you. So make sure to keep endorsing ULIPs and Traditional Plans, whenever you are talking to people.

Whether to buy it for yourself ?? Well, not really !! You are already a part of the financial industry. So you would be pretty aware that an SIP + Term Plan Combination would work wonders for you. Let the ULIPs and Traditional plans be for others, not you.

2. Incompetent “Advisors”

Are you worried about your shrinking revenues because of “No Entry Load” in Mutual Funds? Do Clients give you tough times when you ask for a fees ? Not to Worry !! ULIPs and Traditional Plans hai na !!

These Will take care of your remunerations by giving you fat commissions. Also, make sure that you force the client to buy it in the first go so that, even if he wants to change his mind later, he is stuck so badly, that he cannot exit the plan. So you become a successful “Advisor” and your revenues swell up.

Whether to buy it for yourself ?? Well, you will have to !! This is coz companies might give you targets in terms of premium amount or number of lives covered. When you will not be able to fulfil the target from external clients, you will have to put some “business” either in your name or your family members’ name. Meanwhile, don’t shy away from mis-selling, coz that’s the sole mantra to sell all these plans. Telling the truth about these products might hamper your business.

3. Looking-For-Free-Advice Investors

Do you feel that investment advisors are incompetent and crooked guys and do not deserve a fees?  Are you looking for some free advice + some passback on your investments / premium payments? Welcome to the world of ULIPs and Traditional Plans !!

Here they wont demand any “explicit” fees from you. On the contrary, some might give you a pass-back of the commission they get. What a great deal !! isn’t it ??

Charges ?? Ohh Come On !! Why bother about the charges the insurance companies would deduct from your investment amount ? That is anyways not being told to you. At least you did not have to pay any fees.

Low Insurance Cover ?? Its ok !! At least the premium paid is coming back to you (Maybe at a much later time, when its value would be nothing) But it is coming back to you. Anyways, nothing is going to happen to you. Why let the money go “waste” by buying a term plan?

Low maturity amount ?? Doesn’t really matter !! The amount appears big enough today. What might be its significance after 20 years? Why worry about it today? We have lot of time to think about it “later”.

Congratulations !! You just went through the list  of groups for whom ULIPs and Traditional Plans could be the best. You may just think and decide if you belong to any of the groups above.

If not, then you need to think about some better plans than these. Think about it !!

We look forward to your feedback and comments on the above article. Please feel free to contact us on saurabh.nidhiinvestments@gmail.com if you have any questions.

(In the above article, the author has made use of sarcasm to explain a few concepts. The readers are advised to use their own judgement and consult their investment advisor before making any investment decisions.)

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