Topic: What is ULIP.Is it better than mutual fund?What should be term-eg 10yrs?

Which bank should I buy it from?

This message was edited 1 time. Last update was at 17/07/2008 11:00:58

Both serve different functions, so depending upon what you need one can be better than the other. ULIPs have a market linked investment instrument, as well as a life insurance instrument. Mutual funds, however, are purely an investment instrument.

ULIPs tend to be expensive propositions (vis-a-vis mutual funds) during the initial years but over longer time horizons, the expenses balance out and ulips work out to be cheaper as compared to mutual funds. however, even if the lower expenses of a ulip vis-à-vis that of a mutual fund scheme were to be considered, the latter would still surface as the better option.

Several mutual funds in India also have a track record extending over several years and across market cycles. ULIPs do not have much of a track record to show for; in fact most ulips are yet to experience a bear market.

Investing in a mutual fund portfolio will offer the benefit of diversification to the client. The investor will reap the reward of diversifying across several fund management styles. On the other hand, by investing all his money in just one ulip, the client would be committing his entire corpus to just one style of investment. this can prove to be quite risky over the long term. However, a ulip investor can change the allocation of equity vs. debt in his ulip holding depending upon prevailing conditions and risk profile.

You can make adjustments to your mutual fund portfolio. If you believe you have made a wrong investment decision, you can redeem your investment in a particular mutual fund and invest in another one. Such adjustments are not entirely feasible in a ULIP.
On the other hand, ULIP is a very transparent and flexible insurance policy. Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover (insurance cover) can be increased or decreased.
From a tax aspect both mutual funds and ULIPs get tax deductions under section 80c. The key difference however is that proceeds from ulips are tax-free under section 10(10d) unlike those from a mutual fund which attract capital gains tax.

Typically, we would not recommend a ulip unless you can think of a term of at least more than 10 years

Choose one of the best investment plans for your safe and secured future.
For any ULIP product related information on returns and insurance. Smart and Easy investments. LIVE LIFE KHUL KE.
contact: rudraksh.verma@avivaindia.com

This message was edited 1 time. Last update was at 11/11/2009 08:58:27

sanchitakale wrote:Which bank should I buy it from?

Choose AVIVA: need not go to a bank, easy availability at door step.

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