Is Life Insurance Better Than Unit Linked Insurance Plans?


Considering the soaring inflation, maturing lifestyles, and growth in the cases of critical illnesses, it has become imperative to have a life insurance plan to secure the financial future of your family and loved ones. It becomes a fundamental step toward financial planning for every individual.

There are various types of life insurance plans available in the market today. Let’s compare the two most popular life insurance plans!

A term life insurance plan is the simplest and most affordable life insurance plan out there that offers pure protection to your family. This just includes life insurance cover.

Then there is ULIP – Unit Linked Insurance Plan. It’s a hybrid life insurance plan. This plan combines the benefits of life insurance cover and investments. Along with life cover, this plan gives you market-linked returns as per the funds you choose.

As there are various life insurance plans available, it might get difficult to choose the best plan.

Let’s understand both term insurance plans and Unit Liked Insurance plans and compare their features and benefits.

What are the features of a term life insurance plan?

Term insurance is the simplest and most affordable life insurance plan out there. It secures the financial future of your family without putting a burden of hefty premiums on you.

Term plans offer you a substantial cover for a much lower premium. You can select the Sum Assured as per your needs and requirements.

In case of your demise, within the tenure of the term life insurance plan, your nominee will receive the Sum Assured without any hassles, as making a claim for a term insurance plan is easy. However, there are no returns if you survive the term of your insurance policy.

What are the features of Unit Linked Insurance Plans?

Being a hybrid insurance plan, a ULIP gives the benefits of life cover and investments. Your premium is allocated towards life insurance cover and stock market funds.

ULIPs allow you to invest in various funds as per your risk appetite. They also allow you to switch funds if they aren’t performing well.

ULIPs also allow you to top-up funds as and when you require. They also offer tax-free partial withdrawals after the lock-in period of five years.

The investment strategies in ULIPs can be changed as per your financial requirements. The fund options should be selected based on your risk appetite.

Debt funds come with low risk and are more stable but offer fewer profits. While equity funds are highly volatile, they can offer more profits. Thus, don’t keep all your eggs in one basket and allocate funds wisely!

Which plan is more advantageous?

The different features of term life insurance plans and Unit Linked Insurance plans make it quite evident that even if both provide life cover, they are very different and can be used for various purposes. As a ULIP offers you a chance to invest as per your risk appetite and investment strategy, you can reach your financial goals with ease and keep your life insured. Whereas, with the term insurance plan, only the financial future of your family will be secured. Now that you know about the various features, you can make a decision wisely!

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