ULIP route isn’t meant for people who have limited resources or investments and worried about the return. It is meant for people who wanted the card and took the easy route. Even this route is not easily available now and you still need to meet some guidelines. If you can barely save 2 to 3 lakhs a year and this is the only investment you can make or even if you are investing max 5 to 10 lakhs a year, then, yes, you should be worried about the return on the 2 to 3 lakhs invested in a ULIP. In such a scenario, the person isn’t an ideal candidate for the Infinia in any case. Infinia is meant for people with high income, who spend a lot and thus a couple of lakhs per year is a small amount for them. Let’s say, you are investing 50 lakhs per year and have several crores invested in various products. Then, a couple of lakhs generating 8% or 12% wouldn’t worry you too much as you have a significantly higher amount invested elsewhere.
Coming to the ULIP, a lot of people close them after 2,3 or 5 years. That is the worst course of action. There are high allocation charges for the first 4 years. If you hold on to the end, all allocation charges are refunded 2x (twice what was charged) starting at the 10th year and all mortality charges are refunded 2x as well. In addition, at maturity, all fund management charges are refunded as well. So, obviously, there is some opportunity cost as lesser amount is invested but the 2x refund and the tax savings on gains make up for this to some extent. So, if you close your ULIP before holding it for at least 14 years, you would get a much lower return compared to a mutual fund. If you hold it till maturity, the returns would get close to a similar MF. For some reason, most people ignore these facts and keep crying how ULIPs are terrible.
