'Know your ULIP before investing'

MUMBAI: It's back to business for insurance companies. With the government confirming the status of Unit Linked Insurance Plans (ULIPs) as insurance products, investors are once again going to get calls from insurance advisors proclaiming the virtues of buying ULIPs. Sure, the Insurance Regulatory and Development Authority's (IRDA) renewed efforts to make these products more long-term in nature and provide greater insurance cover in them may serve investors better, but investors still need to educate themselves better about ULIPs if they don't want to be shortchanged by crafty insurance sellers, say investment experts.
"It is high time we get back to focusing on investors since the government has made it clear that ULIPs would be regulated by IRDA. Ever since the Sebi-IRDA turf war broke out, everyone has made the issue into a MF versus insurance companies face-off. But the real issue is about investor protection because some advisors were mis-selling these products on false promises and factual misrepresentation," says a wealth manager, who doesn’t want to be quoted. According to investment advisors, there are several instances where investors were sold ULIPs as investment products with false sales pitches like one doesn't have to pay premium after three years, one can take the money out of the scheme at any point of time, assured high returns from the stock market and so on.
"A pure-term insurance is the best way to buy insurance cover, but most people don’t opt for it because they don’t like the idea of not getting any money back. That is why they opt for traditional insurance products which offer around 6% returns,” says S Sanghvi, a Certified Financial Planner.