I have recently come across agents selling ULIP's as three year plans. You might hear them ask you to invest for just three years and then reap the benefits. All this in my opinion is miselling. Investing in ULIP's work only if your investment horizon is more than 10 years.
Below is an illustration of returns from HDFC Unit Linked Endowment Plus based on term of the plan. These illustrations are for a 34 year male. Assuming returns of 10% per annum the following is what the figures look like.
Term : 3 years
Premium : Rs.25,000 per annum
Sum assured : Rs.1,25,000
Total premium paid : Rs.75,000
Fund balance at the end of 3 years : Rs.68,976
Net return on investments : Loss of Rs.6,024 on principal
Term : 10 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 1,25,000
Total premium paid : Rs.2,50,000
Fund balance at the end of 10 years : Rs.3,17,657
Net return on investments : 7.17%
Term : 15 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 1,87,500
Total premium paid : Rs.3,75,000
Fund balance at the end of 15 years : Rs.7,37,790
Net return on investments : 8.07%
Term : 20 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 2,50,000
Total premium paid : Rs.5,00,000
Fund balance at the end of 20 years : Rs.13,01,447
Net return on investments : 8.43%
Term : 25 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 3,12,500
Total premium paid : Rs.6,25,000
Fund balance at the end of 25 years : Rs.13,01,447
Net return on investments : 8.62%
Clearly, if you look at the net returns, investment in ULIPs only work if you plan to stay invested for long term. If someone is selling you a ULIP for a time frame of 3 to 5 years, it will not work. All he is doing is mis-selling
Friday, October 26, 2007
ULIPS are a long term investment
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5 comments:
hello, i have invested 2 lac yearly in HDFC Unit Linked Endowment Plus II,
my plan is to invest for only 3 yrs i.e. total of 6 lacs in 3 yrs.
What will be my Fund balance at the end of 4th yr.
Are there any risk involved of losses .
Awaiting your commects
Thanks.
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Hi ,
I have invested 50,000 yearly in iciciback pinacle(guranteed plan) and plan
is for 5 year (5 lacks assured)
what will be my fund balance after 5 year , Is there any risk of reducing of the money.
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