ULIP Advisors just do not know how to stop. Someone who harvested phone numbers from random sources calls me and says he’s from Kotak and selling me a plan that is (Hold your breath) NOT A ULIP. According to him it’s a plan where:
- You can invest 20,000 rupees now and get Rs. 40,000 in three years.
- How? You get a 100% bonus after three years in this policy
- You don’t need to pay any further premiums
Unlike his usual bakras, I asked him for a document, and he sends me the Kotak Smart Advantage Plan.
Point 3 was him bullshitting, of course. It turns out that you have to pay premium for three years, and they give you a 100% bonus. Nice? BUT, and there’s always a BUT, you have to stay with the fund for another 17 years before you can see the money. You can’t withdraw more than 10% of the fund value in any year, and if you choose to surrender the policy before the 8th year, you can see surrender charges from 5% to 1%.
And for the first year, guess how much of your money gets invested? 0. ZERO. Zilch. Not a single naya paisa.
The document says:
The first year premium contributes towards guaranteeing you with the Assured Addition Advantage and is not allocated to the investment funds.
Yay! 100% commissions!
Or, the whole 100% “bonus” is just a load of bull. They take your money for three years, “remove” the first years premium and give it back to you as a bonus. That’s utterly misleading – what is IRDA doing, sleeping?
And why the heck are these products being bought? Please, if you get a call from Kotak advisors pushing this product as a “bonus”, please tell them to take a walk.
Update: Also see Ripul Gupta’s post at MoneyRaam about this plan.