Manish talking to Puneet:

Here is where I disagree to some extent , If you disagree that Tradional Insurance can beat Term + Balanced Funds in long run , then you are disagreeing the fact that Equity investments risk goes down in long run , Take two case

Case 1 : A buys Traditional Insurance
Case 2 : A buys Term Plan + balanced funds (not pure equity)

Do you think Case 1 can beat Case 2 ? Why ?

Tell me a case , when traditional insurance is better in terms of safety and returns MF + Term combo ? Do not tell me pure safety , if only safety is the concern , not taking any risk at all with your money is the biggest risk I can think of .

All over the India people like PV subramanyam , Monika Halan and other top notch financial planning enthusiast have said that traditional plans do not give even inflation adjusted postive return , if you are arguing that they do not make sense to you , you already defeat me because I trust them .
Subramanyam’s comments: Thanks these are nice things to hear!

‘Personally I am an equities person (I started investing at my age of 18) and have handled the family portfolio maybe even at 17. I am an incorrigible equity enthusiast. My stand costs my clients money. My clients are banks, life insurance companies, mutual funds and brokerage houses for whom I do training. 

Traditional plans unfortunately do not disclose how they are managed and my view on an employee – who is not responsible for the brand image – is a big issue. Most fund managers have a right to screw up and then move on. So whether it is a fund business or any other business an employee’s fluctuating loyalty will ensure that traditional plans (and ULIPs) will do badly over long periods of time. I am repeating this – we have 20 competent fund managers and more than 500 schemes running.

Traditional plans have so far been run (whose results are visible) by LIC only and it is evident from the results that the traditional plans have underperformed PPF, but till HDFC standard life came out with a term plan, LIC did not have a term plan. When I say ‘has not happened’, I mean ‘has not happened’. Some people can assume that ‘has not happened’ means ‘Will not happen’ – I am responsible to my clients. The readers of my blog should take anything available in the public domain with a pinch of salt including this post.