India’s retail investing boom has brought millions of first-time investors into mutual funds, stocks and insurance products, but according to Nithin Kamath, investors continue to repeat the same costly financial mistakes despite having access to better information than ever before.
In a strongly worded post on X, the Zerodha co-founder highlighted how products such as ULIPs and endowment policies continue to sell aggressively even after years of warnings from financial experts, educators and the media
“When it comes to personal finance, people somehow keep making the same mistakes over and over again. There’s very little creativity in the mistakes people make,” Kamath wrote on X.
Why Kamath believes ULIPs and endowment plans remain problematic
Kamath pointed out that for years, financial experts, investment writers and the media have repeatedly warned investors not to mix insurance with investments. However, despite growing awareness campaigns and online financial education content, products like ULIPs and traditional endowment plans continue to witness steady sales growth.
“ULIPs are usually a bad idea. Endowment policies are usually a bad idea. And yet, ULIP sales continue to grow and endowment plans continue to be sold. People continue to fall for the same pitches, despite all the articles, videos, and excel sheets explaining why these products are bad,” his tweet said.
According to Kamath, the issue is no longer lack of access to information. Investors today can compare returns, check policy charges and even use AI tools to understand product structures before investing. Yet many continue to choose products that often deliver lower long-term returns compared to simpler investment options such as mutual funds combined with pure-term insurance.
“Even a cursory Google search will tell you the problem. And today, in 2026, you can just ask ChatGPT or Claude whether a product is a good idea, and they’ll usually show you the math,” Kamath added.
For investors, the biggest concern with ULIPs and endowment products is that they often combine two separate goals — insurance protection and investment returns — into one structure. Financial planners have long argued that this reduces transparency, increases charges and limits flexibility. In many cases, investors may end up earning lower returns while also remaining underinsured.
Health insurance confusion remains a bigger challenge
While Kamath was sharply critical of investment-linked insurance products, he acknowledged that health insurance remains a more complicated area for ordinary investors. Unlike ULIPs, health insurance policies often involve technical conditions such as waiting periods, exclusions, co-pay clauses and room-rent caps that are difficult for many buyers to fully understand.
Kamath suggested that investors often realise the limitations of their health insurance policies only during hospitalisation, when out-of-pocket expenses unexpectedly rise despite having coverage. This remains one of the biggest financial shocks for middle-class families in India.
“Health insurance is genuinely complicated. There are tiny clauses, room rent caps, waiting periods, exclusions, and conditions that most people don’t fully understand and then they find out the hard way, when they still have to pay out of pocket despite having a policy,” he stated.
For investors, the broader takeaway from Kamath’s comments is the growing importance of financial due diligence. Experts increasingly advise individuals to separate insurance from investing, carefully read policy documents and compare products independently before committing money for the long term.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
