Only for risk cover
Choosing life insurance products such as ULIPs as an investment option may not be a wise thing to do, as complex fee structures may eat into your returns. Insurance products should be chosen only for risk cover; all other features of insurance products are available in mutual funds at a much cheaper cost.
Just sample this set of charges a typical unit-linked insurance policy may levy on you - premium allocation charge, policy administration charge, mortality charge, fund management charge, top-up charge, switching charge, partial withdrawal charge and surrender charge.
All these charges could eat into your investment returns substantially, which makes the case for insurance policies as an investment option weak. Add to this the problem of mis-selling by insurance agents.
Text: Business Line
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