Find your suitable insurance plan
1312
7 min read
Investment is widely acceptable as a key requirement for comfortable living, not just in the present but also in the future. This is because alternate sources of income are slowly becoming a necessity in the current financial situation globally, clouded by inflation and recession. When it comes to investing for the future, the decision can sometimes be tough, understandably, with so many options available in the market today. Here we discuss in detail at least two of the major and the most popular ones – Term Life Insurance and ULIP – to help you make an informed decision.
As the name suggests, a Term Life Insurance plan is a life insurance product aimed at securing the future of your family in the unfortunate event of your demise. Every single person has that inevitable fear in their mind of what would happen to their loved ones; who would take care of all their financial needs when they’re not there in this world?
A term life insurance policy understands that fear/concern very well and is designed to cover all your financial goals for your loved ones in the future. Besides offering financial protection and assistance to your family in your absence, Term Life Insurance also includes some add-on rider benefits to help provide more comfort and ease in your current life (check with your respective insurer).
Another popular financial product among investors is ULIP, the short and commonly accepted acronym for Unit Linked Insurance Plan. The key highlight of this plan is that it offers the dual benefit of insurance and investment to the policyholder – combined under one single policy!
In other words, a ULIP policy is one under which the buyer/policyholder is entitled the benefit of additional wealth generation as well along with enjoying all the benefits of a basic insurance plan. This is what makes ULIP insurance plans highly popular among investors.
The section below details the key features of ULIP along with the salient features of Term Life Insurance to help you choose the right one for your insurance and investment needs.
A Term Life Insurance policy has the following key features to look out for before choosing to buy one for your future:
After discussing the features of Term Life Insurance policy, let us know see below the salient features of ULIP plans.
Here are some of the top features of ULIP to consider before buying one for your investment and insurance needs:
We looked at the major features of both Term Life Insurance and ULIP plans in the sections above in great detail. Understandably, this information can sometimes get a bit overwhelming for the investor, leaving them unsure on how to proceed further since both may look equally appealing at times. This is why we list out here the key differences between the two plans to help you make an educated choice based on your needs:
| Parameters | Term Life Insurance | ULIPs |
| Maturity | No maturity benefits offered to policyholder, except in case of return of premium plans | Redemption option provided; units can be redeemed by the investor at the current prevailing price per unit |
| Type of Financial Product | A pure life insurance product; no wealth creation feature | Dual plan covering insurance and investment both |
| Investment Feature | N/A | Several investment choices offered to the policyholder – bonds, mutual funds, equities, debts |
| Sum Insured | Provided to the beneficiary under the plan only at the time of death of the policyholder | In case of unforeseeable circumstances, either the sum insured or the market-linked return is offered to the nominee, depending on whichever is higher |
| Switch-over Facility | N/A | Investor can switch between funds linked in the ULIP plan in case the original plan fails to deliver desirable market returns; risk returns can also be changed in the ULIP policy |
| Lock-in Duration | No lock-in period; entire death benefit received upon demise of policyholder | ULIPs generally have a 5-year lock-in period |
| Plan Charges | Policyholder charged only for the death financial cover provided under the plan | More charges applicable such as fund-management fee, allocation charge, fund-switching fee, policy administration charges, and the like |
| Affordability | Since the plan only covers death benefit, it is relatively more affordable for the policyholder | ULIP plans offer maturity benefit too along with death benefit so more charges and higher premium which makes it difficult to afford for all |
| Policy Term | Both short-term and long-term plans available; lifetime renewal options with retirement benefits also available | Different tenure options available for different ULIP investment plans; higher returns generally expected on 10-15 year investment plans |
Summing Up
Between Term Life Insurance and ULIPs, which one is a better option to buy or invest in is a tough question. This blog is an attempt to help you understand the key features and differences between both to help simplify your decision. Make sure to check the absolute return on your ULIP plans before investing. You can find some of the best ULIP plans on PayBima along with easily affordable Term Life Insurance policy options on the website for all your future financial needs.
Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.
View this post on Instagram
ULIP stands for Unit-Linked Insurance Plan. It is a type of life insurance policy that combines life insurance coverage with investment options.
A term life insurance policy provides life insurance coverage for a specific term or period of time. If the policyholder dies during the term of the policy, their beneficiaries receive a death benefit.
ULIP provides both life insurance coverage and investment options, while term life insurance only provides life insurance coverage. ULIP premiums are split between life insurance coverage and investments, while term life insurance premiums only cover life insurance coverage. ULIPs have higher fees and charges than term life insurance policies.
The choice between ULIP and term life insurance depends on individual needs and goals. If the policyholder wants life insurance coverage and investment options, ULIP may be a better choice. If the policyholder only needs life insurance coverage, term life insurance may be a more cost-effective option.
Yes, policyholders can switch from ULIP to term life insurance or vice versa. However, it may involve charges and fees, and policyholders should carefully consider their options and consult with their insurance provider before making any changes.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
The Social Security Pension Management Information System (SSPMIS) Mukhyamantri Vridhjan Pension Yojana is the Bihar Government’s social security scheme. This scheme was initiated to offer.
Mar 14, 2024
7 min read 
Filing the ITR within the due date is very important. By doing so, taxpayers can evade penalties and other consequences due to not filing or.
Mar 08, 2024 7 min read 
In India, many opt for life insurance as a smart move to protect themselves and their families, given the unpredictable future. It's a practical step,.
Mar 07, 2024 7 min read 
Taxpayers can claim tax deductions under section 80DDB of the Income Tax Act, 1961, on the treatment expenses of certain specified diseases. This deduction can.
Feb 16, 2024 7 min read 
In most cases, House Rent Allowance (HRA) is a part of employees' salary and they can claim an exemption for HRA. Hence, if an employee.
Feb 13, 2024 7 min read 
Taxes are important for the financial well-being and the good governance of a country. Without taxes, the functioning of the country gets disturbed. The tax.
Feb 13, 2024 7 min read 
When joining a new organization in the middle of a fiscal year, employees need to fill out Form 12B. This form informs the new employer.
Feb 09, 2024 7 min read 
Payment of Income Tax is directly related to the economy of a country. Hence, every taxpayer in India is expected to pay income tax responsibly.
Feb 06, 2024 7 min read 
You may already know that a rental income or the money earned from renting a property is subject to TDS or tax deducted at the.
Feb 02, 2024 7 min read 
We know that almost every individual owns a savings bank account. We also know that the interest earned on your savings accumulated in a savings.
Feb 02, 2024 7 min read 
Mahindra Insurance Brokers Limited (A Mahindra Group Company) - Unit-202, A-Wing, 2nd Floor, Amiti Building, Agastya Corporate Park, Kamani Junction, LBS Marg, Kurla West, Mumbai - 400070. Tel: +91 22 66423800
Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).
Insurance is the subject matter of solicitation.
For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.
Copyright © 2024 Mahindra Insurance Brokers. All Right Reserved.
Get A Call Back