Watch Vivek Jain, Head of Investments at Policybazaar, explain what makes ULIPs such an attractive proposition and why you should opt for Waiver of Premium (WOP) rider.
[00:00:00] Hello everyone and welcome to another episode of the Insurance Insights Podcast by Policybazaar.
[00:00:10] My guest today on the show is Vivek's Gen.
[00:00:12] He heads the investment business at Policybazaar.
[00:00:15] Welcome to the show Vivek.
[00:00:16] Thank you so much Simran, glad to be here.
[00:00:18] Lovely.
[00:00:19] So Vivek, before we start our session today I think our viewers would love to learn a little
[00:00:23] about you.
[00:00:24] I mean you hold an MBA degree from IIM Calcutta right and it's called the Finance Campus of
[00:00:29] India.
[00:00:30] How is it really helping with your current show at Policybazaar which is pure heading
[00:00:33] the investment arm?
[00:00:34] Well, yeah IIM Calcutta is known as the Finance Campus of India I think because a lot
[00:00:39] of alumni are doing very well in a lot of financial services companies across the globe not only
[00:00:45] in India.
[00:00:46] I would say that the learning that I got on campus about finance and comics I think definitely
[00:00:53] they're helping me in the current role in terms of understanding what the customer
[00:00:58] requirements are and basically trying to create innovative products within the insurance
[00:01:04] companies which cater to the financial needs of our customers.
[00:01:07] So definitely the learning from their college are getting into practical use now.
[00:01:13] Now Vivek coming to a topic of discussion today there are a lot of investment options
[00:01:19] in the market right now, right?
[00:01:21] So what would be your top three recommendations for our viewers?
[00:01:26] So Simran, look top three recommendations actually nothing is actually the main thing about
[00:01:32] investment is that you should invest in your goal or your needs.
[00:01:37] Right?
[00:01:38] So if I talk about your short term goal and if you are ready to take the risk then you
[00:01:44] can invest in marketing products.
[00:01:47] If you have a very short turn then maybe mutual funds are the right way to invest but if
[00:01:52] you have a medium or a longer terry or or here then you have to invest in a goal.
[00:01:58] Then the marketing investment plans which insurance companies provide you lips that are
[00:02:03] very good options and if I talk about the third investment then these are two options
[00:02:10] on the market link side.
[00:02:11] If you want to invest on a guaranteed site then there is one guaranteed return plans
[00:02:18] from insurance company which are tax-free if you are investing up to 5.5 lakh rupees annually
[00:02:24] which is a very big amount.
[00:02:25] I mean one normal if I talk about middle class Indian household then around 15,000
[00:02:31] rupees or more than 20,000 rupees monthly SIP.
[00:02:35] So up to 5 lakh rupees if guaranteed return then guaranteed return plans in
[00:02:40] insurance companies is a very good option.
[00:02:42] So I will say these three options but again I will reiterate that actually something bad
[00:02:47] happens.
[00:02:48] This is just to invest in a school and focus on that right to choose a product.
[00:02:55] Now Vivek you mentioned your lips right?
[00:02:57] I mean they are a very popular investment tool right now going to the many brilliant
[00:03:01] features that they have and WOP they were a premium being one of them.
[00:03:06] What does the feature all about?
[00:03:08] So SIP and like I was saying the that your lips are becoming popular and they are mainly
[00:03:13] basically if you have any goal in mind then buying a ULIP for that goal with a waiver
[00:03:19] of premium is a very good option and what is the waiver of premium option.
[00:03:24] So I will tell you in very simple terms some if something happens to the policy holder
[00:03:29] the future premiums are getting paid by the insurance company.
[00:03:33] So even if you are not around, if the policy holder is not around the goal for which that
[00:03:39] policy is will always be secured.
[00:03:42] So now I will give you an example supposing somebody is investing thinking that after 15
[00:03:47] years or after 20 years his or her child will go to college right.
[00:03:51] In if they are investing in any other asset class, any other equity asset class or guaranteed
[00:03:58] debt based asset class whatever investment they have made till they were alive is what
[00:04:03] will grow and give a corpus but in case of ULIPs with a waiver of premium the future premiums
[00:04:10] will get paid by the insurance company.
[00:04:12] So the goal for which they have saved will be intact even if they are not around.
[00:04:18] This is a very very powerful concept which can be used for any goal why restrict only to
[00:04:26] child education, it can be for securing the spouses retirement or if people are young
[00:04:32] and not married maybe they want to secure their parents retirement right just in case if
[00:04:38] people are 25 they have started earning.
[00:04:41] They can buy a plan in case anything happens even at early age say 28-3 years they have
[00:04:46] paid just 3 years of premium the remaining premiums will get paid by the insurance company
[00:04:51] and their parents will be able to enjoy the benefits of that policy.
[00:04:54] That's really so this is why this this feature is becoming really really popular these days
[00:05:00] Yeah, is this an input feature?
[00:05:04] So you have to opt for this feature but a lot of plans also have this as an input so
[00:05:10] there are different variants for a lot of plans wherein this feature may also be in
[00:05:15] built.
[00:05:16] So we read WOP's allowable ULIPs more concept features that our viewers should know about.
[00:05:21] So I think waiver of premium is a very good feature.
[00:05:24] This allowable see ULIPs are a market link instrument where up to over 2 and a half lakh rupees
[00:05:32] is invested in a year which is probably less than 20,000 if you are investing in a month
[00:05:37] then whatever return you will get will be tax-free.
[00:05:41] Versus if you are doing any other equity link investment then you have to give you a short term
[00:05:48] capital gain tax or you have to give you long term capital gain tax.
[00:05:52] Which is a very big advantage is an investment option for a middle class investment where
[00:05:57] you can invest up to 20,000 rupees.
[00:06:01] The other thing which is a very good feature about online ULIPs is that the funds of
[00:06:07] ULIPs generally are 10 to 12 funds.
[00:06:11] Some more than 7 to 8 funds, equity phase funds are generally debt based so you are
[00:06:17] the one who is the market like if you want to move money in debt from debt to equity
[00:06:24] then it is free of charge.
[00:06:27] But not only does it have an exit load like in mutual fund or does it have to be taxed
[00:06:32] basically there are two things if you exit from mutual funds and you have to give an exit
[00:06:37] load and you have to pay tax here.
[00:06:41] Here the switching is free which is also another very good option.
[00:06:48] And now the online ULIPs that are coming are very very low cost.
[00:06:53] So they are as good as any other equity linked investment.
[00:06:59] So will it know one question that we get a lot from a viewers is can you share some tips
[00:07:04] on how to make a crore of a crore.
[00:07:06] Can you share some tips?
[00:07:07] So I think a crore of a crore of a crore is not over-lighted like it says that Rome was
[00:07:12] not built in a day.
[00:07:13] A crore of a crore of a crore is very fast.
[00:07:16] But in that it is because of the power of compounding if you are invested in more time than
[00:07:22] the market.
[00:07:23] So making a crore of a crore is not very difficult.
[00:07:26] If I take an example of a child's education for a crore of a crore of a crore and
[00:07:33] that child is just here she has just got born right?
[00:07:37] So there is 20 years of tenure with it.
[00:07:39] If he invests on 10,000 rupees monthly for the next 20 years total investment will
[00:07:44] be done in 20 years so it will be done in a few hours.
[00:07:47] But if I take the return of 12% which is our stock market Indian stock market is the fastest
[00:07:54] growing stock market globally and that 14 to 15% return in the last 10 years has given
[00:08:00] it.
[00:08:01] So if I also assume 12% number then if you do a crore of a crore of a crore of a crore
[00:08:10] for 20 years then you can make a crore of a crore of a crore.
[00:08:12] But again, the room was not built in a day so it is overnight.
[00:08:30] Yeah.
[00:08:31] There you have it guys this is the secret mantra by the way Jan our investment guru please
[00:08:37] take note.
[00:08:38] We have a quick rapid fire for you are you ready?
[00:08:40] Yeah.
[00:08:41] So best box ever spent.
[00:08:43] I think this was when I was maybe the 9 standard saving up a lot of money for getting my
[00:08:49] favorite video game.
[00:08:50] One investment with you would like to burst.
[00:08:54] One investment with that you lips are a bad investment option is I think one with that
[00:08:59] I would definitely like to burst and that is what we discussed earlier in the podcast
[00:09:04] as well.
[00:09:05] So I think about investment you wish your 18 year old self knew.
[00:09:09] I think power of compounding that's I think the best concept that can really really make
[00:09:15] your money grow in the capital markets.
[00:09:18] I think as soon as you start investing in investments as much time you give your money
[00:09:24] in the market, it increases the more that is the whole funder of power of compounding
[00:09:29] and I wish I had known that 15 years ago.
[00:09:32] Right right.
[00:09:33] We will thank you for this lovely discussion today.
[00:09:37] I surely learnt a lot and I'm sure of you are seeing the same.
[00:09:42] Thank you.
[00:09:43] Thank you, Sabran.
[00:09:44] I think it was great having a discussion on this.
[00:09:46] Thank you.
[00:09:47] If you guys liked that episode please do not forget to like share and subscribe and we'll
[00:09:51] be back with another episode soon.