If you thought Unit Linked Insurance Policies are similar to Mutual Funds and are alternative investment oppurtunities. You may be wrong.
Mutual Fund : - Pure investment.
ULIP :- Investment + Insurance.
Investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis.
ULIPs are good only for people ready to invest for a longer period of time.
Normally mutual funds have 2.5% entry load, but fund charges are huge in case of ULIPs in initial years.
Eg :- LIC Money PLus takes 25-26% as expenses in the first year. This percentage starts reducing as years passes.
Note also that ULIPs generally remove your units as their Annual management charge and monthly charges. Mutual funds account for those in the NAV itself. Therefore, for the same dates, your real return on the ULIP would be lower than the figures mentioned, but on the Mutual funds would be the same
Personally I feel that if someone needs both insurance and investment.
Then he/she should take the combination of Term Insurance(pure insurance) + Mutual Funds instead of going through ULIP route.
Term insurance are quite cheap compared to other insurance in terms of benefit amount.
The money saved on premium can be invested in high growth mutual fund.
Similar post : FMP Vs FD
Friday, January 11, 2008
ULIP Vs Mutual Fund
Subscribe to:
Post Comments (Atom)
6 comments:
This is absolutely fine.
Also one more thought that runs in my mind is ULIP has a part of it investment as MF. So if MF would not give return then it is 100% sure that ULIP would not give either.
So, it would be better to go for MF and for insurance Term Insurance with riders. Riders are also low cost and important.
Thanks
Chandra
Thanks Chandra for your valuable info
There are many more benifits of Investing in ULIP if you can manage your funds online.
You can visit www.paisalo.in
for comparision.
Visit MyLedger.in for your expense awareness and financial planning
Really great this clarification will really help investor to understand mutual fund and Unit Linked Insurance Policies.
What is difference between the Mutual Fund Investment and ULIP insurance Policy
Post a Comment