It is possibly true that Ulips have become more customer-friendly since the new norms came into effect in September 2010 (Shopping in the Ulip Mart, July 2011). However, as your figures suggest, there has been a sharp drop in Ulip sales.
The primary reason is that intermediaries no longer find Ulips an attractive product to sell since curbs have been placed on the upfront commissions that can be charged. The stipulation to phase out upfront commissions over a five year period does not allow the insurance broking community, to which I belong, enough incentive to sell the product.
One has to ask whether this is a good move for the long run. In India, where financial literacy is low, complex products like Ulips have to be explained to consumers and sold by brokers. Very few consumers would step into vendors' or brokers' offices on their ownto buy to the products.
It must be said that Ulips, per se, are not as bad as they were made out to be as long as there was no mis-selling. These are long-term products and consumers would benefit only if they remain invested over a long period. The problem has always been that investors have been seeking short-term gains.
This tendency is unlikely to go away in a hurry. Buyers have to be convinced that they need to remain locked in for years to get meaningful returns.
Sapan Kapoor, New Delhi
As has been clearly brought out in the story, one cannot say for sure that a stock split will definitely lead to an increase in the adjusted post-split share price of the stock, especially in the long run.
There are many factors that determine the eventual movement of a stock, which needs to be kept in mind by investors. To rush in could result in poor investment decisions.
Krishna Jagalamurdi, Delhi
I read with interest your story on the various ways to acquire a credit card once your application has been rejected by the lenders (How to Win the Card Game, July 2011).
While it's well researched, I did not quite understand why a person should be so desperate to have a credit card. Is it that necessary to have a credit card when you're finances don't validate the need for one?
We have seen the problems in countries where the population is heavily dependent on availing credit without having adequate financial back up to service these loans. Spending using a credit card is especially dangerous since interest rates charged are much higher than any other other kind of loan.
It would be better for people not 'credit-worthy' to use debit cards and not get used to spending on credit.
Prasad Mangalath, Mumbai
