There can hardly be anyone who has any interest in investing who could any longer be unaware of the SEBI-ULIP-IRDA drama that’s going on.
In the media, the generally prevalent narrative is that this is a struggle between two regulators about who has jurisdiction over a particular financial product. This question is of the utmost importance, and its outcome will have a great impact on how Indians invest in the future. However, for the careful and knowledgeable investor, the controversy is meaningless.
I know that sounds like a strange thing to say, but the reason I’m saying this is that the question of whether the ULIPs currently sold by India’s insurance firms are an investment-worthy asset class is crystal clear, and has been so for some time now. India’s investing public is made up of a large mass of financially illiterate people who buy whatever is being sold and advertised most intensively.
This is the ULIP market, and they have been a rich source of funds for insurance companies and their agents. If the regulatory system is not overhauled, these are the people who will continue to gift away their hard-earned money to the insurance industry. There’s nothing anyone will be able to do about it. There is now a deeply-entrenched and rich eco-system of high upfront commissions and a vision of immense future profits that finance insurance campaigns of a ferocious intensity that have never been seen in India before.