This topic comes up quite often in my discussions with friends and relatives. They want to save money regularly, so the choice is to go for an insurance product. Financial companies lure complexity and math-averse minds by using words like “returns”, “cover”, “bonus” etc and hide the fact that cost here is really much higher than buying pure insurance (term insurance) and pure investment (mutual funds) separately.
This rediff article, though old, presents the truth even now. Go through the calculations for clear understanding.
And next time, you are trying to buy ULIPs, do the calculations yourself and check where each figure is coming from. Usually you will see rate of return being assumed as >15% based on some past performance of the fund house. Compare that against market returns in that year. In long term(20 years), its highly unlikely that ~15% is possible. A more conservative estimate will be ~10%.
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