GAMES AGENTS PLAY TO MIS-SELL ULIPS
Outlook Money|January 2024
Some distributors and agents use spiels such as promising returns comparable to mutual funds to emotional manipulation to mis-sell Ulips. Here's how to watch out for the red flags
Meghna Maiti
GAMES AGENTS PLAY TO MIS-SELL ULIPS

When Kolkata-based Aranya Sen, 72, booked a fixed deposit (FD) with his bank in 2022, he had no idea he was buying a unit-linked insurance plan (Ulip). It was only later that he realised that he was mis-sold a Ulip in the guise of an FD.

"It was my bank's relationship manager (RM) who lured me into investing in this FD, convincing me about its high, assured return. Only when I had put in the money, I found it was a Ulip. I do not need this. I have been mis-sold," says Sen. He opted to invest in an FD for regular income and guaranteed returns.

Mis-selling means selling someone something that is not the right fit for his/her needs. For instance, if you are going to Canada in winter and someone sells you a jacket that is just about right for Delhi winters, that is mis-selling. When it comes to financial products, mis-selling usually happens through someone you trust, which could be an agent or a distributor.

The scourge of mis-selling remains common in India. The case of Yes Bank is well known. The bank triggered the write-off of AT-1 bonds, which were allegedly sold as FDs with the potential of giving higher returns than regular FDs. The risk that AT-1 bonds carry was misrepresented to the buyers, a lot of whom were senior citizens. The other widely mis-sold product are insurance products.

Though they give guaranteed returns, the real returns after factoring in inflation are, typically, noncompetitive.

Among these, Ulips take the cake when it comes to mis-selling, with the rising equity culture in India.

"First, they provide higher commissions to agents, thus creating a potential conflict of interest where the focus may shift from meeting the client's benefits to maximising commissions," says Chethan Shenoy, director and head - product and research, Anand Rathi Wealth.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM OUTLOOK MONEYView all
Gold ETFs And FoFs
Outlook Money

Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

time-read
2 mins  |
November 2024
PLANNING TO BUY CHILD INSURANCE? THINK TWICE
Outlook Money

PLANNING TO BUY CHILD INSURANCE? THINK TWICE

Child insurance plans combine insurance and investment but often offer low returns due to high costs, making a combination of a term insurance cover and mutual fund a better option for securing your child’s higher education needs

time-read
7 mins  |
November 2024
How Do You Define Happiness?
Outlook Money

How Do You Define Happiness?

Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness

time-read
5 mins  |
November 2024
Avoid Crypto As It Is Highly Volatile
Outlook Money

Avoid Crypto As It Is Highly Volatile

I am 22 years old and have recently started working. I want to invest a small portion of money in cryptocurrency. How should I go about it? Does it require a huge capital investment?

time-read
2 mins  |
November 2024
Invest Right, Don't Speculate
Outlook Money

Invest Right, Don't Speculate

The lure of high returns and quick gains from equity tips, cryptocurencies, and equity F&O can be enticing. But remember, return of capital is more important than return on capital

time-read
4 mins  |
November 2024
The Wedding & Budget: Is Minimalist Trend The Right Knot For You?
Outlook Money

The Wedding & Budget: Is Minimalist Trend The Right Knot For You?

Indian weddings are known for their pomp and grandeur, but minimalist weddings are also in vogue now. Dia Mirza was one such celebrity who went for a minimalist wedding. If you also want to keep things minimal on your big day, here’s how to do it

time-read
9 mins  |
November 2024
Here's How To Buy An ETF?
Outlook Money

Here's How To Buy An ETF?

Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.

time-read
1 min  |
November 2024
How Passive Funds Help Diversify
Outlook Money

How Passive Funds Help Diversify

Passive funds provide a simple way to invest in broad markets as well as in specific themes and sectors, making them ideal for an investor's satellite portfolio

time-read
2 mins  |
November 2024
The Rise Of Passive Funds
Outlook Money

The Rise Of Passive Funds

The popularity of passive funds among retail investors has risen post Covid, and fund houses are out with many variations of ETFs and index funds. Does this category present a new opportunity for investors?

time-read
10 mins  |
November 2024
Tax Reforms: What's In Store?
Outlook Money

Tax Reforms: What's In Store?

The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms

time-read
10+ mins  |
October 2024