Ulips: Long-Term Products vs. Short-Term Nature of Mutual Funds

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ESTOR ISE INV W
about ULIPs: The truth ing option for A winn ion & long-term protect wealth creation For internal use only

MYTH 1

ULIP is no Mutual Fund + P thing but rotection REALITY
• Ulips are long ter m products vs. the short term nature of mutual funds • Create a habit of systematic saving over long ter m • Designed keepin g in mind lifestage needs • Lifestage & risk ap petite based switches between equity & debt at no/little extra cost • Offer saving & pro tection in a tax-efficient way

ULIPs
MYTH 2

TOP 7 MYT HS ABOUT
Customers do n't g know the chaet to rges REALITY • No, in fact it is th transparent financial e most with all charges disclosproduct - Administration char ed: - Mortality charges ges - Fund management • The explanation of charges ch part of pre sales producarges is post sales in the pol t info & icy pack that you receive • In case of mutua l charges are deduct funds, ed from NAV or No.of units, w knowledge of the inve ith no • IRDA regulations stor m mandatory to reveal ake it commission in the agent’s pre-sales illustration MYTH 3

ULIP is a short term pro duct REALITY • Life insurance is a long term protection & wealth creation tool, Ulips also s erve the same objective • Ulips are best suited for long-term goal p lanning: Children's edu cation/ marriage, own retire ment etc • Customer should buy ULIPs o n l y if th e y h ave an investment horizon of up to 10 years or more

For internal use only

S A BO U T P 7 MYTH TO
e mutual funds g else but expensiv ULIPs are nothin
REALITY MYTH 4

IPs UL

a long term cost proposition over • Ulips are a low on Ulip charges: • IRDA has put a cap ure over 10yrs n - 2.25% for policy te re under 10yrs enu - 3.00% for policy t arges) vestment horizon is product over the inarges/upfront loads, und management ch efit from a financial - 1.35% for FMC (f ch easure customer benterm of the product and not through way to m • The scientific er yield (IRR) over the full ges (FMC) through custom ing: ad nd management char as they are misle latively higher fu wer FMC load, however have re er offer better customer value through lo e no entry rn of 10% p.a. - MFs hav front charges, howev of 7.75% p.a. on a gross investment retu r up - ULIPs have highe mum customer yield as stipulated a minigreater than 10 years) • IRDA h n of (for investment horizo you switch funds • No exit loads when security transactions tax uity mutual funds arges compared to eq o capital gains tax & • N lips deduct lesser ch the 10th year, most U • After For internal use only

S A BO U T P 7 MYTH TO
MYTH 6 MYTH 5

IPs UL
at various stages provide tax advantages • ULIPs deduction u/s 80C Premiums eligible for • e tax free • Partial withdrawls ar -free u/s 10(10D) • Maturity value is tax REALITY

ages in ULIPS here are no tax advant T

ndition that as only put a pre-co tice h • No, the SEBI no ister ULIPs with mpanies should reg Life Insurance co to ban ULIPs I, there is no request SEB ulators, SEBI & has asked both reg • Finance Minister atus-quo IRDA to maintain st sts is at the core of omer rights & intere • Protection of cust all regulations

invested I will lose my money I notice in ULIPs due to SEB

TOP 7 MYTHS ABO UT
MYTH 7

ULIPs
ULIPs sales will be ba nned
past few months. The issu egulation of ULIPs has be e pertains to either Party's en in discussion between 10th April, 2010, directed ive (dated 9th April 201 jurisdiction to regulate U LI SEBI and the IRDA over Ps. companies, the IRDA on the offering, marketing and s ervi all life insurance compani 0) issued to life insurance cing of ULIPs, notwithst es to continue insurance bu siness as usual including anding the directives issu ed by SEBI.

REALITY
• The matter regarding the r

• In response to SEBI's direct

For internal use only

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IP UL FOR
LATIONS RDA REGU I SAFETY INVESTORs re
rudential measu •P on licyholder protecti lations • Po u ointed actuary reg • App ce orporate governan...
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