Though ULIPs (Unit Linked Insurance Plan) are considered to be a better investment vehicle it has failed to capture the imagination of the retail investors in India because of which of the following reasons?

Solution(By Examveda Team)

ULIPs (Unit Linked Insurance Plans) are a combination of investment and insurance, but their growth in India has been hindered by multiple factors. Let's break it down:

Option A: Regulatory jurisdictional fight between SEBI and IRDA → The primary reason ULIPs have not gained traction among retail investors is the conflict between SEBI and IRDA. This jurisdictional ambiguity caused confusion, leading to uncertainty and a lack of investor confidence in ULIPs.

Option B: They don’t offer better tax benefits → While ULIPs offer tax benefits under Section 80C and Section 10(10D), other instruments like PPF and ELSS provide similar or even better tax benefits, making this a secondary reason for limited retail investor interest.

Option C: They offer lesser returns compared to traditional insurance policies → ULIPs are linked to market performance, meaning their returns are volatile and uncertain. In contrast, traditional insurance policies often promise fixed returns, which could be more appealing to conservative investors.

Given the significant role played by regulatory confusion, Option A: Regulatory jurisdictional fight between SEBI and IRDA is the best answer.