ULIP Insurance

You buy an ULIP (Unit linked Insurance Schemes) insurance policy, which claims of 10% returns each year… year after year (4% more than what bonds pay you)
1) Where is my money going?
For the first 3 years your policy has ZERO surrender value and in the fourth year it does get some value which is less than the Principal you paid!!!!
1lakh @10% interest after 3 years becomes = 1.331 L
After 2 years 1.21 L
After 1 year 1.1 L
Immediately 1 L
So you paid them 4 L and your money ideally should have become 4.641 L, but your surrender value is 3.80 L
So you lost 84100/- (doing what?)

2) You might say insurance?
Mind you the premium for Term Life Insurance Policy is 4100/- p.a. for 25 lakhs cover
So you are still losing 47100/- at the very inception.

You are investing for a very long term in a newly formed private company. It does not look good if cons you through some hidden charges on the very first day.

2) Markets rise Markets falls. You are going to dip into your long term assets only when you have no other choice. Assuming that at the time of death/financial crisis the market is at its peak is something which is too much to ask for. If your emergency fund value fluctuates so widely, where is the sense of security?

PS: I firmly believe that each individual should have a contingency fund and an insurance to gear him for the unexpected. All I am asking “Is this the right scheme?”