ULIP and Mutual Fund are two topics that most people like to relate. They are familiar from one perspective that ULIP and Mutual Fund help you invest. Some consider ULIP better than Mutual Funds while some believe that the mutual fund is the right investment instrument. Some are also of the opinion that ULIPs are considered more expensive than Mutual Funds. Money Objectively looking into the expenses can reveal the real picture.
| Comparison Criteria | ULIPs | Mutual Funds |
| Returns: Cost of investment assuming similar fund returns through active fund management | Cost of investment*: Max Life OSP
5 Year – 1.9% 10 Year – 1.7% 15 Year – 1.6% |
Cost of investment*: Top equity open-ended MF 2.0 % to 2.5 % |
| Additional Financial Protection for your Family | Guaranteed financial cover for the family on the first monthly investment – X which is 120 X | Nil |
| Complete Exemption from Tax | Yes – EEE
Investment – 80C Withdrawal – 10 (10D) Maturity – 10 (10D) |
No – Short-term capital gain (less than one year), long-term capital gain (more than one year), ELSS – ETT, Non-ELSS – TTT |
| Ability to rebalance your portfolio without any exit load | Yes
Unlimited switched to move your fund from equity funds to debt funds |
No
Need for exiting and liquidating before re-investment |
| Disciplined Savings Leading Long-Term Wealth | Yes
Minimum five-year lock-in |
ELSS – 3 years, Non-ELSS – 100% liquidity |
| Savings for the family should go to the family | Buying a policy under MWPA ensures that the creditors or relatives cannot attach the proceeds. | No such option exists |
*Male Age 30, Monthly Investment of Rs 5000
The above was a comparison between ULIP and Mutual based on an example of a person who is 30 years old and has a monthly investment capacity of Rs 5000. Now, let us know more about ULIP in general. After LTCG Tax on equity in action, there are more highlights to ULIP that you must know.
Taxability
After the inception of LTCG from the 1st of April 2018, any gain from ULIP will be tax-free. It makes ULIP one of the best investment plans. Earlier only the short-term gains were tax-free under the section 10 (10D). Irrespective of whether the gains are from short-term or long-term investments, ULIP enables you to exempt tax.
Dual Benefits
Buying ULIP, you avail two benefits. One is the benefit of long-term investment and the second one is protection. The protection that it provides is a security for the family, not just the insured. Investment, however, reaps you the benefit only after the lock-in period. In short, ULIP is the instrument you need for gaining higher returns in the long run.
Basic Life Cover
By choosing ULIP, you make a road for earning money and protecting your family in case of your death. With this two in one facility, ULIP wins the show. Secure the future of your dependents even after you are gone. No one plans for death. It comes to everyone. Being prepared for it and earning some money can help your family deal with the situation confidently. Your planning gifts them a normal life later.
Flexibility
You are never stuck with ULIP. If you feel that the fun you have invested in, doesn’t show good results as per your expectations, you have the option to switch between funds. You are at ease to make changes according to the market condition. You also have the flexibility to choose your premium payment terms and policy term years.
Pay Once to Avail Dual Benefits!
In life, we tend to pay for our life cover and separately pay for investments. Why not pay for one platform and gain both the benefits. There are best ULIP plans available that you can learn about. Choose the best one out of the best. With easy switch provision, transparency, tax benefits, higher returns in future, and live cover benefits, ULIP has been marking its niche even in the field of investment too. Before you choose the premium to pay, ensure that you select an amount that fits the bill for gaining in future and giving the required protection. By investing in ULIP, you are making way for long-term savings that give you returns and provide life protection.
