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Nithin Kamath Warns Investors About Money Mistakes; Here’s Why ULIPs Hurt Wealth Creation & Your Insurance Must Stay Separate

Samira Vishwas | May 9, 2026 11:24 PM CST

Nithin Kamath Issues Big Warning To Investors: ‘People Keep Repeating The Same Money Mistakes’. Despite the retail investing boom in India, which has led to millions of first-time investors entering mutual funds, stocks, and insurance products, many are still slipping into the same old traps- even with faster internet and better apps, says Nithin Kamath. In a scathing critique of investors, the Zerodha co-founder said products such as ULIPs and old-style endowment plans continue to be purchased, despite being criticised by financial experts, planners, and educators for years. Kamath said that with unlimited access to financial advice, online calculators, comparisons, and even AI platforms, today’s investors still mix insurance and investments without fully understanding the long-term costs. He wanted to drive home the point that “guaranteed” promises and flashy sales pitches can silently destroy wealth creation if buyers do not understand the risks they are taking on.

What Are ULIPs and Endowment Plans?

ULIPs (Unit Linked Insurance Plans) and endowment plans are a hybrid of insurance and investment.
In ULIPs, part of your premium goes toward life cover and the rest is invested in market-linked funds.
Endowment plans offer life cover along with a savings component that provides fixed or low returns.
However, financial advisers say they only muddy the waters between insurance and investing.

What Nithin Kamath Say About ULIPs?

Kamath reiterated his concern that investors are still being nudged towards these product bundles, even though insurance and investment have completely different objectives.

He notes that ULIPs and endowment policies often have:

Lower long-term returns than market-linked investments
Higher charges and hidden costs
Lower transparency on how money is allocated
Less flexibility to manage or exit investments

He says the best way to achieve both goals is by keeping them separate, using pure-term insurance for protection and mutual funds or other market-linked instruments for long-term wealth creation.

Why Experts Recommend Separating Insurance and Investments

Financial planners often recommend separating insurance from investment products as they are fundamentally different in purpose. Typically, such recommendations from experts point to complex and confusing product design, higher long-term costs, lower investment efficiency, and inadequate insurance protection. Therefore, they usually advise using pure-term insurance for coverage and mutual funds or other market-linked instruments for long-term wealth creation.

Aishwarya Samant

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