Question

Comparison between mutual fund and ULIP plans?

Answer 1

Learn how you can decide between ULIP and mutual fund with an example:

Mr A invests 50,000 in a ULIP investment, while Mr B buys mutual fund units with the same amount. All of this money is invested for both Mr A and Mr B. However, every month, a part of Mr A’s investment is taken as insurance cover, which acts as the ‘protection element’ or ‘insurance premium’. This buys him an insurance cover of 5 lacs. In Mr B’s case, he would need to buy an insurance policy separately to get a life cover. In case Mr A meets with an accident and passes away, the insurance company would compensate his family with 5 lacs or the fund value, whichever is higher. This is not so for Mr B.