If you want a term insurance, go for ULIP!!..
Well, many investment and insurance specialists say that don't mix insurance with investment..
With the following comparison you will trash the above statement!! Can't believe right?.
I compared two plans
1. LICs Amol Jeevan -- which offers one of the cheapest term insurance plans
2. Bajaj Allianz's Capital Unit Gain -- which is a ULIP
Sum Assured : 10 Lakhs
Term : 15 years (considering the home loan period that most people opt for).
Age : 30 yrs
Annual Investment in ULIP : 10000 (you will have to invest 10000 for 3 years)
Product premium/yr total amont amount you get
paid for 15 yrs at the end of term
------------- ---------------- -------------------- ---------------------------
Amol Jeevan 2,812.00 42180 Nil
CUG 1290 to 3600 30000 Fund value(aprox 1 Lakh)
Considering about 10% annual returns in ULIP, at the end of 15 years, your fund value will be somewhere around 1 Lakh!!!. (roughly) Even after deducting all the charges!!!..
So, now you tell me is term insurance is good or ULIP!!
Premium in Term insurance is fixed, but it varies in ULIP that's why you see the range of Rs. 1290 to 3600.
Thursday, June 7, 2007
Tuesday, April 17, 2007
ULIP and Mutual Fund Comparison
I recieved couple of emails asking for comparison between ULIP and Mutual Fund.
Here it is..
I will start the comparing in a different way.. my point is "When to choose investing in ULIP??".
In short, ULIP = Insurance + Mutual Fund
1. If you don't need insurance, ULIP is not the best bet
2. If you need insurance and want to invest in mutual fund kind of instruments, ULIP is the BEST bet
3. ULIPs are hybrid products. that means, they have insurance and investment component
4. ULIPs offer insurance at a very cheaper rate than term insurance, as others say, I don't agree to the point that term insurance + mutual fund is better.. I don't agree. you can compare for yourself.
5. In ULIP, you can switch between Equity fund to Debt fund and vice versa without any entry/exit charges but you can't do that in Mutual funds. in MFs, there will be entry/exit charges if you do that
6. You have to invest for atleast 3 years in ULIP, but MFs are not like that
7. ULIPs are eligible for Section 80C tax rebate. MFs are not (except tax saving MFs)
8. ULIPs have lock-in period of 3 years where as MFs are not (except tax saving MFs)
9. Returns on ULIPs are not taxable, but returns on MFs are taxable if you withdraw within 1 year
10. You can invest surplus amount in ULIP with minimal entry load or charge, where as there is nothing like surplus in MFs.. in MFs everything is considered as plain investment with same charge
11. ULIPs may or may not disclose the holding portfolio but mutual funds have to disclose where they are investing
12. ULIPs generally have low expense ratio than MFs
13. ULIPs have additional charges on insurance where as MFs doesn't have any insurance component
14. ULIPs have additional charges called "Allocation charges".
So, choose wisely, invest wisely. Bottom line is,
"If you want some insurance at cheaper price and also want to investment in mutual funds, ULIPs are the best instruments to invest in"
Here it is..
I will start the comparing in a different way.. my point is "When to choose investing in ULIP??".
In short, ULIP = Insurance + Mutual Fund
1. If you don't need insurance, ULIP is not the best bet
2. If you need insurance and want to invest in mutual fund kind of instruments, ULIP is the BEST bet
3. ULIPs are hybrid products. that means, they have insurance and investment component
4. ULIPs offer insurance at a very cheaper rate than term insurance, as others say, I don't agree to the point that term insurance + mutual fund is better.. I don't agree. you can compare for yourself.
5. In ULIP, you can switch between Equity fund to Debt fund and vice versa without any entry/exit charges but you can't do that in Mutual funds. in MFs, there will be entry/exit charges if you do that
6. You have to invest for atleast 3 years in ULIP, but MFs are not like that
7. ULIPs are eligible for Section 80C tax rebate. MFs are not (except tax saving MFs)
8. ULIPs have lock-in period of 3 years where as MFs are not (except tax saving MFs)
9. Returns on ULIPs are not taxable, but returns on MFs are taxable if you withdraw within 1 year
10. You can invest surplus amount in ULIP with minimal entry load or charge, where as there is nothing like surplus in MFs.. in MFs everything is considered as plain investment with same charge
11. ULIPs may or may not disclose the holding portfolio but mutual funds have to disclose where they are investing
12. ULIPs generally have low expense ratio than MFs
13. ULIPs have additional charges on insurance where as MFs doesn't have any insurance component
14. ULIPs have additional charges called "Allocation charges".
So, choose wisely, invest wisely. Bottom line is,
"If you want some insurance at cheaper price and also want to investment in mutual funds, ULIPs are the best instruments to invest in"
Saturday, March 3, 2007
Effect of NAV on Switching between funds!! What is cut off time?
You can switch between different funds in ULIP.
But what is the cut off time for the switch?.
According to irda, cut off time is 4:15 PM. Well here is the example
Scenario : Switching between Debt to Equity Fund
Time : Placing the request at say 2:00 PM. By written request or through cash.
Date: March 03, 2007
NAV of Equity fund dated March 02, 2007 : Rs 30
NAV of Equity fund dated March 03, 2007 : Rs 31
NAV of Equity fund dated March 04, 2007 : Rs 33
o.k shall we do the analysis now.. ?
As you put your request by 2 PM your NAV will be taken as Rs. 31.
As per my observation, NAVs are usually declared at 10:00 PM or so..
IRDA says
10.6.1.1 In respect of premiums/funds switched received up to 4.15
p.m. by the insurer along with a local cheque or a demand draft
payable at par at the place where the premium is received, the
closing NAV of the day on which premium is received shall be
applicable.
10.6.1.2 In respect of premiums/funds switched received after 4.15
p.m. by the insurer along with a local cheque or a demand draft
payable at par at the place where the premium is received, the
closing NAV of the next business day shall be applicable.
10.6.1.3 In respect of premiums received with outstation
cheques/demand drafts at the place where the premium is received,
the closing NAV of the day on which cheques/demand draft is realized
shall be applicable.
But what is the cut off time for the switch?.
According to irda, cut off time is 4:15 PM. Well here is the example
Scenario : Switching between Debt to Equity Fund
Time : Placing the request at say 2:00 PM. By written request or through cash.
Date: March 03, 2007
NAV of Equity fund dated March 02, 2007 : Rs 30
NAV of Equity fund dated March 03, 2007 : Rs 31
NAV of Equity fund dated March 04, 2007 : Rs 33
o.k shall we do the analysis now.. ?
As you put your request by 2 PM your NAV will be taken as Rs. 31.
As per my observation, NAVs are usually declared at 10:00 PM or so..
IRDA says
10.6.1.1 In respect of premiums/funds switched received up to 4.15
p.m. by the insurer along with a local cheque or a demand draft
payable at par at the place where the premium is received, the
closing NAV of the day on which premium is received shall be
applicable.
10.6.1.2 In respect of premiums/funds switched received after 4.15
p.m. by the insurer along with a local cheque or a demand draft
payable at par at the place where the premium is received, the
closing NAV of the next business day shall be applicable.
10.6.1.3 In respect of premiums received with outstation
cheques/demand drafts at the place where the premium is received,
the closing NAV of the day on which cheques/demand draft is realized
shall be applicable.
Kids ulip plan!!.. Is it any good? What's the difference?
Few of my observations on Kids' ULIP Plans
1. Kids plan is no magic. It can't give any better returns than any other plans
2. If you are spend thrift and someone else to manage your money then go for kids plan.. of course for your kid
3. Difference is that the other ULIP plans are flexible on withdrawl. But Kids plan is little rigid on that.
4. Amount you get is based on the age of your kid.. rather I would say milestone of your Kid's life. for example, after 10th std, 12th std and for degree.
5. Sometimes it's good to go for Kids' plan as you may tend to withdraw all your money at once!!!..
Happy investing!
ulipinvestment@gmail.com
1. Kids plan is no magic. It can't give any better returns than any other plans
2. If you are spend thrift and someone else to manage your money then go for kids plan.. of course for your kid
3. Difference is that the other ULIP plans are flexible on withdrawl. But Kids plan is little rigid on that.
4. Amount you get is based on the age of your kid.. rather I would say milestone of your Kid's life. for example, after 10th std, 12th std and for degree.
5. Sometimes it's good to go for Kids' plan as you may tend to withdraw all your money at once!!!..
Happy investing!
ulipinvestment@gmail.com
Monday, February 26, 2007
When is the right time to invest? Don't wait for the year end.
As per Income Tax Guidelines, Tax Saving Investments can only happen with the earnings in the financial year only!!
That means, if you want to invest in tax saving instruments in April, it will not be considered for tax savings. (This is valid only for salaried employees who get their salary at the end of the month).
So, once you start getting earning in the financial year, you are good to invest.
Don't wait until march.. start saving/investing right from May!!.. Count the crucial 10 months of returns!!..
If not in bulk, consider Systematic Investment Plan!!!.
ulipinvestment@gmail.com
That means, if you want to invest in tax saving instruments in April, it will not be considered for tax savings. (This is valid only for salaried employees who get their salary at the end of the month).
So, once you start getting earning in the financial year, you are good to invest.
Don't wait until march.. start saving/investing right from May!!.. Count the crucial 10 months of returns!!..
If not in bulk, consider Systematic Investment Plan!!!.
ulipinvestment@gmail.com
Saturday, February 24, 2007
ELSS and PPF returns are Taxed!!!???
Good news for ULIP Investors!!!
Heard of EET??. Means, Exempted Exempted Taxed. E means, Investments are Exempted from tax, E Interest earned Exemted from tax and T means Returns on maturity are Taxed.
So far PPF, ELSS had EEE that means they are totaaly tax free. on investment, interested earned and on maturity.. but not any more..
Draft recommandations for budget 2007-08 says that PPF and ELSS will be EET!!!
So, only instrument that is totally tax free is insurance based investments!!!..
As ULIPs come under Insurance Based Products, they won't come under EET tax net!.
Have a look at this article in economic times : http://economictimes.indiatimes.com/PPF_savings_may_be_taxed_on_maturity/articleshow/1647814.cms
Happy investing in ULIPs!
Saturday, February 10, 2007
Does NAV reflect the ULIP Performance?? No! to a large extent
ULIPs are meant for long term investors. But you never know when you would need the money. Marriage, Child's education, etc etc.
So, considering 3 years as a investment horizon, it's important to understand the effect of charges in ULIP as you may want to exit after 3 years for better investment opportunities.
Also, note that you can take your money after 3 years.
Charges in the initial years of ULIPs eat up lot of your money. For example, let's compare two ULIPs with initial charges..
ulipinvestment@gmail.com
Friday, January 5, 2007
ULIP Comparison - Charges and others
As you know there are so many charges which are applied on the investment you make on the ULIP investments. Here is a simple to use spread sheet which will allow you to capture the charges and other facts of ULIP plans offered by different companies.
Have a look at this spread sheet. Whenever you call a ULIP investment advisor from a company chart out these charges and other benefits and compare.
http://spreadsheets.google.com/pub?key=pavymIhDyVVDmcRKksdgMCQ
ulipinvestment@gmail.com
Have a look at this spread sheet. Whenever you call a ULIP investment advisor from a company chart out these charges and other benefits and compare.
http://spreadsheets.google.com/pub?key=pavymIhDyVVDmcRKksdgMCQ
ulipinvestment@gmail.com
Tuesday, January 2, 2007
Invest in ULIP and start getting returns within a month!
ULIP - Unit Linked Insurance Plans are the best Insurance cum investement product.
No wonder they are selling like hot cakes because of the advantages it provides to the individual. For example..
1. Provides life insurance cover
2. Good returns on investment
3. Facility to choose between the funds (like equity, balanced, debt, etc)
4. Tax savings
Till june 2006, ULIPs had huge entry load/fund management charge (upto 70 %).. But now lot of companies came up with new ULIP products which charge a mere 5% + Mortality charges.
Initially, it is very confusing to understand ULIPs but they are the most transperent products ever!.
There are ways you can invest in ULIPs and start getting returns within a month. These returns are not from ULIP itself but with other avenues. And these reutrns can grow upto 1 lakh per month!.
Contact me if you have any doubts on ULIP, I will try to answer them.
ulipinvestment@gmail.com
ulipinvestmet.blogspot.com
No wonder they are selling like hot cakes because of the advantages it provides to the individual. For example..
1. Provides life insurance cover
2. Good returns on investment
3. Facility to choose between the funds (like equity, balanced, debt, etc)
4. Tax savings
Till june 2006, ULIPs had huge entry load/fund management charge (upto 70 %).. But now lot of companies came up with new ULIP products which charge a mere 5% + Mortality charges.
Initially, it is very confusing to understand ULIPs but they are the most transperent products ever!.
There are ways you can invest in ULIPs and start getting returns within a month. These returns are not from ULIP itself but with other avenues. And these reutrns can grow upto 1 lakh per month!.
Contact me if you have any doubts on ULIP, I will try to answer them.
ulipinvestment@gmail.com
ulipinvestmet.blogspot.com
Immediate returns on ULIPs??!!
It's surprising but it's true!.
Though ULIPs have 3 year lock in period, there are ways you can get the returns right from the first month in the form of check!.
When you buy a ULIP from Bajaj Allianz through me, you will get immediate returns in the form of Bonus. (This bonus will not be from Bajaj Allianz)
It's true. Bajaj Allianz ULIPs have given the best returns in the past and will continue to do so in future.
They have very good track record and best policy and claims administration. send a mail to ulipinvestment@gmail.com to find out more.
ulipinvestment@gmail.com
Though ULIPs have 3 year lock in period, there are ways you can get the returns right from the first month in the form of check!.
When you buy a ULIP from Bajaj Allianz through me, you will get immediate returns in the form of Bonus. (This bonus will not be from Bajaj Allianz)
It's true. Bajaj Allianz ULIPs have given the best returns in the past and will continue to do so in future.
They have very good track record and best policy and claims administration. send a mail to ulipinvestment@gmail.com to find out more.
ulipinvestment@gmail.com
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