Thursday, November 27, 2014


Whenever I see Clients portfolio first time , I usually see atleast some portion or atleast one of the ULIP Investment ( not only insurance ).Whenever I do Insurance and Investment, Analysis and I recommend on the same as per the Product mix, Need of the client family and the market conditions, I have two options to provide -

ONE- To advice client to surrender the ULIP Policy
TWO- To advice client to continue

Whenever I have clients with ULIPs in their Investment Portfolio, Always people ask me whether to Continue, or to Stop investing further or to Stop investing and withdraw. Lot of Smart Investors also ask me if they need to switch their ULIPs option.

To explain further,all insurance ulips sellers ,most of the time have an option available  that one can Switch from say Equity / Growth / Maximiser to either Secure ( Protector ) or Balanced ( Different product seller / manufacturers have different names).Now what and why is that??

I will help you understand, in short- If as per market conditions one wants to book profits or limit loss or seize an opportunity of market cycle from either of the asset classes ( Equity or Debt-as the case may be) , and do not want to withdraw currently, one can do so utilizing this option at very low cost / initially some even offer no cost / some offer limited switches in a year free of cost.

The crux lies in what to do in current market condition ?
Should one utilize switch option in ULIPs?
If yes, When ? Is it now ?

Well to understand this, let us discuss few current market indicators as below,


Now if you see Equity Market seems to be on the BULL Run ( Though ahead of fundamentals, lot on future expectations ), Debt Markets interest rates seems to be on Down turn especially in medium term ( in next 6 months RBI is expected to cut interest rates- REPO Rates ), Bank FDs interest rates are moving southward / down, gold seems to be on down to stable trend , crude oil also seems to be stable to down turn and rupee seems to be stable to depreciating in medium term. ( ALL THESE FACTORS COUNT TO TAKE SUCH SWITCH DECISSION ALONGWITH INDIVIDUAL CONCERNS AND NEEDS )


Where do you think Markets are headed??What is your take on each asset class??What does your portfolio demand?? Where are you placed as to your goals in life ?

If you are bullish and do not need money now and can hold on for longterm, you can hold on to Maximiser / Enhancer option, if you think you need to book profit, you can switch to Secure option from growth / equity and if you are not needing money now and also not sure what is happening in markets, you can continue holding Balanced option.

If you are holding Secured option, then what to do? Well you must have hold it for long and you can continue if you need money in next few yrs./months and if needed in more than medium term, then can you switch to Equity option? Well depends upon what is your market outlook, liquidity condition, your portfolio composition, your goals, your desired future, your market take etc., as I say, no one is expert enough to time the market.

No one in individual capacity is expert enough to time the market ( IS ANYBODY ? , you know someone ? ) and hence after fair study of the above and many market related indicators, one has to see what is his/her family desired future or goal and take a decision, if one should switch or not.

What is your self assessment ?
Do write and comment , if you want to know more, and even if you differ on views.