Even though the new year gift of SEBI got popular limelight regarding abolishing of loads, the media has totally forgotten the other gift given by the Insurance Regulatory Authority of India ( IRDA) as a directive to its investors.
There has been opinions poles apart on the the SEBI while investors like me felt happy, some people did think that the order was bad and Government should NOT interfere in market plays.
If one goes back and tries to understand how our developing markets have reacted to securities industry it has been full of harshads, ketans etc. Based on those findings, these regulatory bodies have been set up so that the private congloumarates dont fool the general investors.
But definetly the SEBI and IRDA has recieved complaints by truck loads before which they took up this twin actions!!! Anybody is free to challange their decisions and SEBI/IRDA has enough proof of the misdeeds of its industry leaders aka agents.
IRDA has made it mandatory from this year that every ULIP or unit linked insurance plan should give a fact sheet detailing how much charges, the company would deduct before investing to generate income for the insruced investor.
The investor has to sign on that document and a copy of that should be kept with the investor.
In otherwords, the industry tries to and has sucessfully cut anywhere from 17% to 70% in cases as different fees without much knowledge of the investor!!! The poor investor only got to know about the cheating after a couple of years.
When 90% of the industry experts have one sentence of advice to offer – “Never mix insurance with investment”, the agents lure investors about future safety and intentionally forget to tell about loads.
Compare and contrast this 17% to 70% in the initial 3 years in a mutual fund, where a charge of 2.25% is the norm!!!
Definetly the AMC’s touting these ULIP’s will come up with other methods of cutting their pie but investor beware and continue to complain to the regulators.
The bottom line is quite evident You can fool some people some time; but not all people all time.