A maturing market amid the mayhem
Would you buy a ULIP? Share your views
It was not the perfect weekend for investors of unit-linked insurance products (ULIP) after market regulator SEBI barred 14 insurance firms from issuing or promoting such plans, which are a favourite among investors.
But Finance Minister Pranab Mukherjee said on Monday SEBI and insurance regulator IRDA have agreed to maintain status quo on ULIPs and also jointly seek a binding legal mandate from an appropriate board.
Such products, which offer a combination of insurance and investment, were introduced in 2001 and Mukherjee’s statement came as a relief for people who invest in ULIPs to ride the stock market and also save on taxes.
But should the stock market be worrying? Media reports say local insurance firms invested close to 620 billion rupees in equities in 2009/10 of which ULIPs accounted for roughly 500 billion rupees, according to insurance industry estimates.
After SEBI’s move, sentiments were hurt which also contributed to an 80-point fall in the BSE Sensex on Monday.
But as the regulators continue to battle it out, it is the common man who would be worried about his investments.
A tweet on social networking site Twitter read – “ULIP which I invested are in ban list by SEBI, little bit worried.” Another tweet read “Irda says ULIPs are safe. Whom do you trust?”
What is your call on this product – do you have investments in ULIPs? Would you now buy these plans or wait till the issue is resolved?