When an agent approaches you with ULIP product; before
filling up forms, he should be explaining you what is a ULIP and how it works!
You should ask him the following 6 questions to make sure you know what you are
about to buy!
1. What are
the returns offered by this ULIP?
As per the rules of IRDA, an agent should explain you the
workings of ULIP with an assumptive illustration earning 6-10% returns.
However, if he claims that in the long term the policy is expected to give more
than 10% then this information is not misleading. But if he claims that the
policy ‘WILL’ earn 18-20% or even Million% returns, you need to stay away from
such agents!
2. What are
the Charges applicable in this ULIP?
He should give you detailed Information on all the charges
that are/will be applicable to ULIP. The important charge you need to know is
Premium Allocation Charges. If he doesn’t disclose any Charge that is
applicable then I am sure it’s not because of his dishonesty and no other
reason. Ask him the company brochure mentioning the exact charges where all the
charges are listed and explained in detail.
3. How does
it suit my Risk Profile and fit in my requirement?
Before suggesting you the ULIP the agent should have asked
you all the details about your Cash flow (Salary, Expenses) and your future
goals with ULIP investment should be addressed. He should also try to
understand if you can take the risks associated with the ULIP. If he does not
ask you these things then you ask him back why he has not asked you these
questions. Get the word out of his throat!
4. How is
it better than other ULIPS?
Ask him what is unique with the ULIPs he is recommending to
you and make sure he does start all non-sense of Sec 80C benefit and high
returns and all… Every ULIP has it! Ask him what are the special features with
ULIP and how do they address your requirements. If he claims that his company
ULIP is the best and no other ULIP can match it then ask him for references if
any states that. Just a plain claim from agents will not do. An agent must have
enough knowledge to make you understand how to make best use of your ULIPS.
5. How does
it score over Term Insurance + Mutual funds combination?
Best Ulip
Insurance plan are combination
of Insurance and Investment produce, There is no point in taking it, if it
can’t perform better than Term Insurance + Mutual funds SIP. Switch benefits in
ULIPS are the main benefit in ULIPS. He must put pressure on that point, If not
he is himself not aware of it. Refrain from taking the policy if he starts
claiming that returns from ULIPS will be much higher than Mutual funds.
6. What was
the performance during Market Crash ?
Agents generally try to put up rosy picture and hence refrain
from disclosing the funds performance in bad markets. If the fund has done bad,
that is acceptable. Its investor responsibility to take care of switching and
asset allocation. So there is nothing wrong in performing bad in bad markets.
Agents will first try to avoid the confrontation, but finally may tell you that
they did bad and returns are very low. Ask him for exact number in return and
try to find out how other ULIPS performed.
My personal
Experiences
I have never come across any ULIP agent who has tried to sell
the product in a professional manner. This has its own reasons like meeting
Sales Target pressure or poor training to Agents. Anyways, it’s not acceptable
and cannot be accepted. For so many years, Mis-selling is happening in India.
Source: http://blogs.rediff.com/bestulipinsurancepolicy/2016/06/13/ritikashah11998-30/
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