Is the 14% ULIP promise fact or just another marketing trick?
Published by India Today
Abhishek Kumar's role: Quoted
Abhishek Kumar said such pitches amount to mis-selling, pointing out that they ignore policy charges, wrongly promise tax-free maturity on large premiums and use projections outside IRDAI rules; India Today cited his LinkedIn post.
What Abhishek Kumar said
Why can a ULIP chart showing the whole premium growing be misleading?
I called such pitches textbook mis-selling. The chart assumes every rupee of the premium is invested and grows at the projected rate, and that is not how a ULIP works. Charges for allocating the premium, the cost of the life cover (mortality charges), fees for managing the fund and administration charges are deducted along the way and keep shrinking the amount actually invested. Over long periods, that gap is real money.
Is the maturity amount of a high-premium ULIP tax-free?
No. Pitches often promise that the whole maturity value will be tax-free, but that did not hold for high-premium policies. Under the rules at the time, ULIPs with annual premiums above ₹2.5 lakh did not get tax-free maturity, and the gains were taxable as capital gains. In the illustration I looked at, the premium was ₹10 lakh a year, so the tax-free claim was simply wrong.
Can insurers show high projected growth figures in ULIP illustrations?
No. IRDAI rules let insurers show only two fixed, lower scenarios in their official benefit illustrations, so a projection built on a much higher rate is a serious red flag. I believe such numbers are used to make the product look more attractive than it is, because people rarely question a figure that appears official.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on insurance
The article examines sales pitches that present unit-linked insurance plans with high projected growth. It explains how policy charges cut the amount actually invested, why tax-free maturity does not apply to high-premium policies, and that IRDAI permits only lower illustrative scenarios in official benefit projections.
Publisher source
Is the 14% ULIP promise fact or just another marketing trick?