ULIP (Unit Linked Insurance Plan) – Hindi (2019) - YouTube

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Namaskar, my name is Mukul and welcome to Asset Yogi.

Friends, in this video we are going to talk about a very popular investment product called ULIP.

ULIP stands for Unit Linked Insurance Plan.

Now ULIP is one such product which is highly recommended,

when we want to save our tax.

You also get tax rebate on ULIP under section 80C.

Along with this, it is also said that in this you get the benefit of investment as well as insurance.

your money is invested in the Share market or you can invest in Debt funds.

According to your risk capacity.

So you are getting all these three things inside one product,

so should this product be very good?

not necessarily,

we do not pay attention to some things many times,

Often people talk about its advantages and disadvantages,

but there are few things, we need to pay attention to,

I will try to include all those things in this video.

I will show you some calculations,

that if we invest in ULIPs vs if we put the same money,

in a separate insurance and investment product,

then in which you can get more profit.

stay tuned in this video.

Now to understand whether there is any problem in the structure of ULIP or not,

first we have to understand the product of ULIP properly.

ULIP i.e. Unit Linked Insurance Plan

it is an insurance product.

What are our options to buy insurance?

The first option we have is that we can buy a term insurance.

Term insurance is pure insurance in which there is

no maturity benefit, there is only death benefit.

That is, if the person dies in any unfortunate event,

then his family gets some money.

The second product is the traditional insurance plan,

which we also call endowment plan or whole life insurance.

In that, along with your insurance, your investment also gets done,

whatever money you pay in premium.

Some part of that money goes for his insurance,

some part goes in the form of investment.

And that investment goes into your debt form.

That is, any insurance company will put that money either in bonds

or will put it in government schemes.

There your returns are assured in a way.

you get the returns of 5 to 6 %.

Now traditional insurance plans are not recommended

because returns are very less there.

In 5-6 percent, only your inflation can be beaten.

Actually your money doesn't add much value.

Now the third product is here ULIP.

Under ULIP, some part of your money goes for insurance

and some part of your money can be invested in the form of investment i.e.

your money can be invested in the Share market,

it can be invested in the form of Debt.

That is, government bonds, corporate bonds can be invested in all of these.

This is the only benefit of ULIP,

that you will get good investment as well as insurance and your money will grow well

because your money will be invested in the Share market.

In the Share market you get better returns.

In fact you have the choice.

You can also invest in Debt funds where your returns are assured.

There you get returns of up to 6, 7, 8 percent.

And you can also invest in Equity Funds

where you can get returns of 10,11,12 percent.

And there are hybrid funds as well wherein

some portion goes into debt and some portion goes into equity.

There you get to see returns up to 8, 9, 10 percent.

The policy term you have under ULIP is from 5 years to 30 years.

That means it's for minimum 5 years.

Your lock-in period is of 5 years.

You cannot withdraw money within the lock-in period,

This is the limitation of ULIPs.

If you withdraw the money in 5 years, if you surrender the policy,

after 2 years you have paid the premium, after that if you surrender the policy,

then you will have to pay surrender charges,

and your fund which you had for 2 years.

The money will go into a discontinuous policy fund

where you will get an interest of 4% only.

this 4 percent is similar to the interest you receive in the savings bank account,

you will get as much only.

So here it is a kind of Limitation.

If you put the same money elsewhere then you may have a liquidity.

If you had taken mutual funds or ELSS,

then you could withdraw your money there anytime.

There is definitely a lock-in period of 1 year in mutual funds,

within which your exit load is taken, you can definitely withdraw the money,

but there you have to pay an exit load of about 1 percent.

But in the case of ULIP, you cannot withdraw the money,

so this is the limitation is here.

But one of the benefits of ULIPs, which is said quite a lot,

is its tax benefits.

There is an option of ULIP within the limit of 1.5 lakhs,

that you have under section 80C.

You can claim a tax rebate on the annual premium you pay.

And second, here you do not even have to pay long-term Capital Gain tax.

From the last year, mutual funds are taxed on long term Capital Gains Tax.

And in that too, if you have returns above one lakh in a year,

long term capital gains tax is levied at 10%.

No such Capital Gains tax is applicable in case of ULIPs.

And the maturity amount that you will get in ULIP, if you have invested for 15-20 years,

then at the time of maturity you will get the money

There is no tax of any kind on that too,

but the question arises that if there are tax benefits on ULIPs.

Even then does it make sense that we invest in it,

Should we combine insurance and investment in one product?

We will understand this with a little calculation,

for this we need to know how much we are getting life cover after all.

Which we call Sum Assured.

Sum Assured means that your life is covered about 10 times

of the annual premium you are paying.

Life cover means Death benefit.

By chance, if any unfortunate accident happens with someone,

then how much money will his family get?

Now hold your thoughts here for a bit because I will touch up on it later,

In the last we will understand the calculation is it Sum Assured sufficient,

So instead of ULIP, one should take term insurance or Mutual fund,

I will do a comparison of both through a calculation.

So we will get an exhaust idea.

Now how do you get returns in ULIP,

here you have one death benefit and one maturity benefit.

If no one dies, then the amount you have to get at maturity

will be as much as the total fund value

i.e. the amount invested in the form of your Annual premium plus

whatever returns you get on it, you will get that money back.

In the second case, if unfortunately, someone dies,

then there are two types of policies,

In the first policy, if the Sum Assured is kept at 20 lakhs.

or till the time the total fund value is let's say 25-30 lakh.

Whichever is more of the two, your family will get it.

So if the fund value is 25-30 lakhs, let's say it's of 25 lakh.

Sum Assured is worth 20 lakhs, so your family will get 25 lakh.

under the second type of policy, both Sum Assured plus Fund Value is available

That is, a Sum Assured of 20 lakh will also be available and also a Fund value of 25 lakh.

Your premium gets higher under this second type policy.

Now let us talk about Expenses,

ULIPs are highly discouraged because you have to pay a lot of charges here

premium allocation charges, policy administration charges, fund management charges,

surrender charges, switching charges for everything you have to pay the charges.

Nowadays there are low cost ULIPs

in which your premium allocation charges or mortality charges

or your policy administration charges are not levied here,

only Fund management charges are levied.

IRDNA ​​has also capped the fund management charges at 1.3%.

Yes, even if the charges are reduced,

then as I told you that there may be some problem in the structure,

we will understand it only by calculation.

Before that I would like to highlight a little bit on the returns.

In what way do we get returns in ULIPs,

You can assume that if you are investing in only equity portion.

Putting all the money in equity funds

So you get returns of 10 to 11 percent after taking out the expenses.

In Mutual funds, you can assume that even after taxation, you get returns of 12 to 13 %.

You can Compare ULIPs Semi Fund Houses and Mutual Funds.

I have analyzed myself

Mutual funds always give slightly better returns as compared to ULIPs.

Gives better returns of one to two percent.

But let us do investment comparison, you would think

that even if I am getting one to two percent less in ULIPs

as well as I am getting insurance,

then is it not a better product?

to understand this let's look at the calculation once,

Whenever we invest, we want to get maximum returns from it.

That is, whatever money we are investing, we would like to get maximum value for it.

So here also if we want to invest money in insurance and investment.

It is natural that we would like to get maximum life cover under insurance.

We get maximum returns in investment for the same amount.

So now we will compare whether the combination of a term insurance

plus mutual fund is good

or the option of ULIP will be better for you.

Let's understand this with an example.

Suppose someone's age is 30 years old, let's say his salary is up to ₹ 700000 p.a.

How much do he need minimum life cover

and how much life insurance should he take,

So for this I told a multiples,

if you have not seen my video, then definitely watch it

that how much life insurance you should take?

In that we talked that the minimum life cover for a 30-year-old man

should be 15 to 20 times his annual salary.

Its a very simple logic that in the coming 15-20 years

your salary should be replaced,

your family should not have any problem.

Here if we calculate with this formula, then it needs life cover

That is 15 X 7 lakh = 1.05 crore rupees life cover.

We call this Sum Assured.

Here I am writing this in short form,

so much life cover is needed.

Then there are two options for taking this life cover

we are not talking about traditional plants here,

where we are talking about term insurance plus mutual funds because we want good returns

in the traditional plan I already talked about that returns are not good there,

then we are not talking about that.

Let us talk about term plan first.

if you want Life cover of 1.05 crore,

then the premium you will have to pay for the term plan

then your insurance from the term plan would be about 10,000 p.a.

Now let's talk about ULIPs.

In ULIPs If you need this much Sum Assured,

How much is Sum Assured, how much do you get in the ULIP,

10 times of Annual Premium.

Now, You want a Sum Assured of 1.05 crore.

so here, I will take a rough figure of 1 crore.

let's say if you want life insurance of one crore then for that

If it is 10 times the annual premium then how much annual premium will have to be pay,

10 lakh rupees,

Now look a little carefully at this figure,

his salary is not even of 10 lakhs,

his total salary is 7 lakh p.a.

And if it wants a sufficient insurance of one crore,

then he will have to pay a premium of 10 lakh rupees p.a.

it is natural, that it is not possible with ULIPs.

So this is the biggest flaw of ULIPs

so now if this person will consider the ULIP.

So he will calculate back actually it will say that my budget is 10,000 per month.

In that I would like to see how much insurance I will get in ULIP

or I want to invest that much only.

If the investment is made for 10 months at 10,000,

then its annual premium becomes 120,000.

Under this, the Sum Assured becomes 10 times the annual premium

So how much did you get only Sum Assured of 12 lakh.

Now you compare these two figures and see,

he is getting 12 lakh Sum Assured here

See here you are getting insurance of one crore.

Now in this example, we were investing 10 lakh per month,

and how much have we invested here i.e.1,20,000.

So out of 120000, he took Term plan worth 10,000 per month.

So the remaining 1,10,000.

he can easily put this money in mutual funds

And can earn returns of 12 to 13 percent in this mutual fund Post tax

And here, on 1,20,000 he will get returns of 10 to 11 percent.

Now you can see that the returns are even better here, yes the amount is 12,0000 here.

110,000 is being invested here.

But you see how much life cover you get in only 10000,

it's a sufficient Life cover.

There is no comparison here.

You can see here that Sum Assured which is needed more in ULIPs is not affordable.

ULIP does not work as a very good insurance,

you can see it as an investment and if have to see it as an investment then,

So for this you have many options.

As we saw through calculations,

if we take term insurance, then there we get good life cover

as well as if we take mutual funds

then we also get very good returns.

Also, if you want to take tax benefit, then you can put money under ELSS scheme.

You will also get benefit under section 80,

yes there is a lock-in period of 3 years,

it is very less than ULIP.

On the other hand, if we put money in ULIPs,

then our life cover is very less and the returns are also less.

Yes, now the question arises that if we look at ULIP only as an investment product,

So whether it has any benefit or not,

there is a reason to understand here.

There is the benefit of Switching.

Switching means that if you switch from equity funds to Debt funds,

then you do not incur any charges, no tax of any kind is charged in ULIP.

You have to pay Nominal charges of only 100 to ₹ 200.

and your advantage is that if you think that if the stock market is going to fall in the coming time,

So you can withdraw your money from there and put it in a debt fund.

And here you will not even have to pay any tax,

but if you switch from equity to mutual fund,

if you have moved to a debt fund of a semi fund house.

Your units are then redeemed and are subject to Capital Gains tax.

But to take this benefit there is a limitation here,

that you should have Expertise, Knowledge and should have time.

That's why most people invest in ULIPs and mutual funds

Because they don't have time to do research.

So if you can't research this method then ULIP is not the product for you.

It is better to take Term insurance and take a Mutual fund.

But even as a general rule,

we should not mix Insurance and Investment.

In Insurance, we look for safety for our family

so that some money our family gets for sure.

But if we mix the investment in it also lock-in period comes in,

if the stock market comes in the middle

then there is no surety.

If your money goes down let's say, the stock market will go down in the coming two-three years

If your family needs to take money due to an accident,

then you will get very little money there.

So this market volatility we don't want that to be in an Insurance.

So that's why we should keep Term Insurance separate,

and if we invest in Mutual funds.

Or we can invest in any Investment product.

That is the choice we have,

then we put the same amount in Mutual funds whether we put it in ELSS,

if we want to put in EPF.

Or if someone wants to buy Real Estate

by putting it in NPS, then that choice is with you.

So I hope after watching this video you must have got the idea of ​​ULIP,

what are its features, what are the advantages, what are the disadvantages.

Why we should invest in ULIPs

and why we shouldn't.

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