Is ULIP Better Than Life Insurance?

A ULIP is a hybrid investment and insurance product. A mortality fee (insurance) is deducted from the ULIP premium, and the remaining is invested in funds. A ULIP's goal is to help you grow your money and wealth.

ULIPs are popular because they combine insurance and investment into one convenient package. ULIPs are preferred by most investors who want a combination product since they are market-linked and generate results dependent on market circumstances.

Term insurance, on the other hand, is purely a safety net. The premium you pay is only used to cover mortality costs. It is devoid of any financial component. The primary goal of term or life insurance is to give your family the security of a defined amount of coverage in the event of your death, as well as to protect their financial situation.

Traditional insurance products cover term, endowment, and whole life insurance. They are thought to be risk-free and provide guaranteed payouts in the case of death or the end of the term.

Benefits Of Life Insurance

The following are some of the advantages of having life insurance:

1. Life Risk Cover

Life insurance provides you with high-risk protection that protects you and your family in the event of a disaster. 

2. Death Benefit

Purchasing life insurance ensures a secure future for you and your family. If something bad happens to the assured, the assurer pays the bereaved family the entire amount, which includes the sum assured plus the bonus. Life insurance also protects the interests of people whose wages are dwindling as they become older, persons who have accidents, and retired people. There are a variety of policies to choose from, and you may pick the one that best fits your needs.

3. Return On Investment

When contrasted to other investment options, life insurance plans offer a higher rate of return. The bulk of life insurance policies come with incentives that no other investment strategy can equal. The massive investment will provide a reasonable return and will be repaid in full as the amount assured after the term or when the guarantee passes away. Money under a life insurance policy is safe and secure, and it safeguards against hazards. In both circumstances, the money invested and the earnings are properly reimbursed.

Benefits Of ULIPs

The following are the benefits of ULIPs:

1. Investing Options That Are Flexible

Through several funds within the same plan, ULIPs offer a selection of high, medium, and low-risk investing options. Depending on your risk tolerance, you can choose an appropriate plan.

ULIPs allow you to customize the sum assured and premium based on your specific needs. They also allow you to top-up your equity investment to take advantage of investment opportunities that emerge as a consequence of changes in the environment or your revenue flows.

2. Transparency

You'll learn out about what was used, the value of an asset, and the expected rate of return throughout the policy's whole term before you buy it. It's usually a good idea to do some research on the product you'll be putting your hard-earned money in. The annual account statement, quarterly investment portfolio, and daily NAV reporting will keep you up to date on the status of your investment portfolio at all times.

4. Liquidity

ULIPs also allow people to make a partial departure in the event of unforeseen future events; after the first five years, you can remove cash from your Unit Linked Insurance Plans.

Conclusion

A life insurance policy is recommended if you want to provide financial stability and security to your family. If you don't want your family to face financial hardship after your death, life insurance is the preferable option. Most financial advisors will advise you that you need at least ten times your annual salary in life insurance to be well protected. ULIPs now virtually always give life insurance equal to ten times the annual payment. As a result, if you assure yourself through a ULIP, you will have to pay all of your income in premiums.

Also read - Things You Need To Know About ULIP Before Investing In It

ULIP Is A Smart Investment Choice

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.