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Should you invest in LIC Flexi Plus ULIP? by smita patil
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Should you invest in LIC Flexi Plus ULIP? |
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Advice,Insurance,Investment
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The decision is purely financial and I would like to leave this with you, with the following thoughts. What if after 2 years you feel that none of the investment fund is performing as per expectation? Or you would not be able to pay further for personal reasons then would you be comfortable enough in leaving the fund in discontinuation fund earning you saving bank a/c return? Debt investments perform differently in rising, falling and stable interest rate scenario. There are other debt instruments for short/medium/long term horizon available, which are more actively managed and have potential to deliver much better returns and having flexibility to switch as and when required. Even if you chose “Mixed fund” option for parking of funds (15%-25% equity exposure) in LIC Flexi Plus, would it be wise to invest with a 10-20 years horizon? Even though there is some sort of government backing to LIC but government interference has its own negative factors. I have presumed that readers of TFL are adequately insured and are convinced on buying term insurance… and if this is the case then would it be wise to pay more mortality charges. With the reduction of charges some may argue that ULIPs have now become cost efficient than Mutual funds in the long term, which is true to some extent. Personally I have always found the structure of ULIP very attractive. But on the other side I want investments to be flexible enough, on which cost effective, immediate and comfortable action can be taken as and when required and ULIP does not give me that flexibility. I mean I can go with index funds, now days there’s option of direct plan, direct stocks, Bonds, Fds or whatever investment instruments suits my risk appetite, goals, tax profile etc. Many people are of the view that Financial Planners are against ULIPs but this is not true. We are not against or in favour of any product but it actually become difficult for us to map the goals of clients to such non flexible and costly products (though for few years). Anyone who’s having their basic financial planning, investments and goals intact can do anything with the surplus he’s left with if any. But it’s always advisable even to use that surplus with caution to factor in the uncertainty risk in financial plan.
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