ULIPs are not for senior citizens — Here’s how to pick the right investments to secure the golden years of your life

• Senior citizens need to focus on capital protection, regular income, liquidity and tax efficiency.
• With increased life expectancies, senior citizens should invest a portion of their portfolio in equity to generate inflation-beating returns.
• Never buy a product aggressively pitched by agents, without understanding the product fully.

In the last few days, Twitter has been awash with tweets about senior citizens being mis-sold ULIPs by banks. People have gone to the extent of calling it ‘atrocious’ and a ‘crime,’ and even wondered why the regulator does not step in to curb such malpractices.

In fact, if mis-selling was a crime, which it is, selling ULIPs to a senior citizen would rank high up in the list. What makes it worse is that sometimes ULIPs, or Unit-Linked Insurance Plans, are sold as fixed deposits, with the promise of fixed returns.

The needs of senior citizens are completely different from that of someone in their 30s or even 40s. Senior citizens need to consider four things when it comes to their investments.

“The first is capital protection. Senior citizens should prioritise safety and choose investment options that provide capital protection. The next is regular income. Investment options that offer regular income are ideal for senior citizens who rely on their savings to meet their living expenses,” says Nehal Mota, co-founder, Finnovate, a hybrid wealth tech platform.

As a senior citizen, you should choose investment options that offer liquidity since you might need to access those funds in case of emergencies, mostly medical. And finally, the tax implications also need to be considered so that the investments are tax-efficient.

When it comes to ULIPs, it does not meet the first three criteria. Hence, ULIPs are one of the worst investment choices for a senior citizen.

So, where can the the senior citizens invest

Senior citizens should hence invest in products that fulfil the above criteria. Says Gaurav Mashruwala, financial planner and author of Yogic Wealth, “Investment in retirement is like three cricket stumps. The first stump is liquidity- senior citizens need to keep some money for urgent needs. The second stump is regular income, which they need for routine expenses. The third stump is the residual corpus which needs to be grown and which should beat inflation.” He says that as a senior citizen, you need to have about six months of reserves, which could be kept in a savings account. Then, there should be regular income from whatever investments you have made, for three to five years. And the residual amount should go into equity mutual funds.

Below is a sample retirement portfolio where a senior citizen with an investible corpus of ₹1.1 crore can earn a regular monthly income of approximately ₹60,000 (yearly income approx. ₹7.2 lakh). One can thus choose from a range of products that are suitable for senior citizens based on requirements.

Investment Option	Investment Amount (₹)	Approximate Returns Rate	Annual Payouts (₹)	Taxation
Senior Citizens' Saving Scheme (SCSS)	15,00,000	8.20%	82,000	Taxable
Pradhan Mantri Vaya Vandana Yojana (PMVVY)	15,00,000	7.40%	74,004	Taxable
Post Office Monthly Income Scheme (POMIS)	9,00,000	7.40%	74,004	Taxable
Corporate FDs	10,00,000	7.50%	75,000	Taxable
*Bank FDs	5,00,000	7.00%	35,000	Partially
Taxable Bonds (GOI/State Bond)	5,00,000	7.40%	37,000	Taxable
Tax Free Bonds	6,00,000	5.00%	30,000	Tax free
**MF Systematic Withdrawal Plan (SWP)	20,00,000	8%	1,60,000	Partially
Accumulated Corpus : NPS	10,00,000	6%	60,000	Taxable
Accumulated Corpus : PPF	15,00,000	7.10%	1,06,500	Tax free
TOTAL	1,10,00,000		7,33,508
			Monthly: 61,125

Source: Finnovate * Bank Interest is tax free to the tune of 40,000/- p.a. **Gains of 1 lakh in mutual funds and equities, both put together, in a year is tax free

The need for equity
With improving life expectancy due to the advanced healthcare system, it’s important that you stretch your retirement corpus. “To match their income with the increased lifespan, it’s important to generate superior returns. Although equities are considered riskier, they have always provided better returns than debt over the longer tenure,” says Raghvendra Nath, managing director, Ladderup Wealth Management.

He says that considering the promising growth prospects of the Indian economy for the coming decade, senior citizens can allocate around 30-35% of their portfolio to equity markets. However, it is important to exercise caution and focus on investing in established blue-chip companies that offer stability rather than opting for highly volatile growth stocks. Equity mutual funds are another option.

After starting with this allocation, they can gradually reduce their exposure by 5-10% every 10 years to align with their decreasing risk tolerance as they age. “Regular portfolio reviews and adjustments will also be essential to ensure their retirement income strategy remains aligned with their evolving needs and risk tolerance,” says Nath.

Pabitra Kumar Das, 72, invests in equity-linked savings schemes (ELSS) to get a tax deduction, and also give his retirement corpus the required boost. He says ELSS works for him as it provides him with reasonably high returns and is also tax efficient.

Don’t become a victim of mis-selling

Finally, it is important not to be carried away by the sweet talk of the friendly guy at the bank and be sold a ULIP for some other unsuitable investment product.

Says Anny Ghosh, senior consultant Alpha Capital, a wealth management firm, “Never buy a product aggressively pitched by agents. It is very obvious that an agent or a representative of a financial service provider pitches a product based on the commission or fee that he earns. So it is better not to get carried away by what he suggests. Even if the agent happens to be a family friend, ask him questions. Products like life insurance are often mis-sold by agents as investment products. Please remember insurance is a product having potential to cover risks.”

She also adds that you should never buy a product you do not understand. The golden rule to prevent mis-selling is not to buy a product unless you have understood the product fully.

After spending a lifetime working, proper financial planning is crucial to make the years after retirement the golden years they are meant to be. It is not in our hands if we die early or live long. However, we can be prepared for whatever life brings.