I have some questions regarding ULIP?

1)for e.g,Why do people say it is an investment for long-term.Say for e.g,I invest in an ULIP,say Rs 1000/- every year for 20 years, and
at the 20th year,if the market is really down, then it reflects in your NAV and your returns as well right?

2)over a period of 20 years my NAV also varies depending on market trends right?(for e.g NAV for 5 years may be Rs.20,another 5 years may be Rs.100 and another 5 years may be RS.5/-) Is the historical NAV values considered for the returns when the policy is matured ?

Whenever NAV is high, that means good returns.. So, is it necessary to be long term 15-20 yrs?

5 Replies to “I have some questions regarding ULIP?”

  1. Hi Ganesh,
    Congrats for a brilliant question.
    Let me answer one by one.
    Q 1. Equity(may be ULIP, MF or even Direct investment in Shares) is meant for long term and not for short term.
    becuase a research taken on sensex from inception i.e.., from 1979 till date, it has given an average positive return ranging from 14% to 20% for a 20 year horizon, but the same sensex has a given an average return of negetive 46% to positive 250%(in 1992-93).
    So after considering this even you will say at least you can expect a decent return of around 10% in a long run.
    Q 2. Market variation will affect your investment only if it is a short term planning. so the mantra for a right investment is based on the four principle which you have to follow and are:
    1.Goal Based Planning
    2.Right Asset Allocation
    3.Stay Invested for a long term
    4.Start Early and Invest Regularly

    Hope you doubts are cleared.
    still having doubts mail me @ [email protected]

  2. ULIP is not a good investment insturument. Considering the high cost onvolved it is not advisable to go for ULIP for the purpose of investment. I would advice you to invest in some good equity Mutual Funds. If at all you need an insurance cover (that is a must) take a term plan.

    MF investments are cost effective and you may invest through SIPs.

    Have a nice day

  3. History has sufficient proof that investment in share market has given very good returns in the long term.

    The sensex was 3300 on 31st Jan 2002.

    What was the sensex in 1989, 20 years before? Present sensex is 15000.

    One cannot compare today’s sensex with that of 20 years ahead. Neither can the NAVs of 20 years ahead be imagined.

    The charges involved in a ULIP are very high. They eat into your premium and therefore your invested amount. So to see a appreciable rise in your investment, you have to remain invested for a long term. Only then can the charges looted by the insurance comp be covered.

    You cannot invest a small sum like Rs 1000/- every year in a ULIP.

    If you surrender your policy befor maturity you may loose due to lower surrender value.


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