UNIT LINK INSURANCE PLAN V / S Mutual Funds BOTH ARE DIFFERENT TYPES OF AVENUES OF INVESTMENT. SO, STRICTLY SPEAKING COMPARISON is not possible. ONLY FEATURES COMPARED. THAT are SIMILAR.
UNIT LINK INSURANCE PLAN V / S Mutual Funds BOTH ARE DIFFERENT TYPES OF AVENUES OF INVESTMENT. SO, STRICTLY SPEAKING COMPARISON is not possible. ONLY FEATURES COMPARED. THAT are SIMILAR.
UNIT LINK INSURANCE PLAN V / S Mutual Funds BOTH ARE DIFFERENT TYPES OF AVENUES OF INVESTMENT. SO, STRICTLY SPEAKING COMPARISON is not possible. ONLY FEATURES COMPARED. THAT are SIMILAR.
FEATURES ULIPs MF + TERMPLAN Premium SA once fixed Term Plan would contribution cannot be changed lapse if premium is flexibility not paid Convenience Single product for Keeping Track of purpose of two avenues of Investment, Investment is be Insurance Cover. cumbersome. Additional Riders NIL Benefits Investment Goal Long Term Short Term Objective Objective
AREAS OF COMPARISION :
¾ STRUCTURE
COMPARATIVE BENEFITS
o ULIPS are more beneficial over long term in terms of
Allocation Charges, also Loyalty additions are possible. o IN MUTUAL FUNDS no rewards for Long-term investor as all charges are Fund Based thus eroding into profits of investor.
FLEXIBILITY
o CHOICE of Life Cover with opportunity for
investment. o ENTIRE SPECTRUM of investment options available thus, diversification of investment in different markets is possible. o SWITCHING option available to enhance portfolio gains.
ULIPs being Long term in nature compulsion of investment by regular premiums thus helps in disciplined savings.
FUND MANAGERS PERSPECTIVE
Since most of investor pool in Mutual Funds are Institutional
Investors, they have short term goals MF Manager is under heavy pressure to book profits in short term thus giving him hardly any time to have discipline in Investing.
In case Fund Manager of ULIP pool of investors are entirely
Retail in nature and nature of Investment product being long term & compulsory lock-in of funds, the pressure on the Fund Manager is comparatively less thus enabling him to have discipline in investment thus generating higher returns.
¾ DIVERSIFICATION / SWITCHING
In Mutual Funds shifting of portfolio involves costs (entry
load)
In ULIP shifting/switching of portfolio comes at nil costs or
at a lowest cost.
¾ RETURNS
MF Managers view being short term in nature & markets
being volatile in short term returns will be affected. To book profits timing the market is required for entry and exit, which may not be always possible.
Fund Managers view in ULIP being long term in nature
timing the market is not required as in the long term markets are less volatile, & have shown good returns.
NO TAX BENEFITS on investment in MF unless it is Equity linked saving scheme.
Investments in ULIPs are Tax Free u/s 80C
Returns in MF are tax free IF held for more than a year,
However, if held for less than a year they attract (STCG) Short Term Capital Gains Tax at 11.22%. STCG cannot be set off against (LTCG) Long Term Capital Gains.
Returns in ULIPs are tax-free.
Snap Shot : MF/ULIP
Feature Mutual Fund ULIPs
Insurance Cover N Y Multiple Investment N Y options in one plan Investment Discipline Y Y Flexibility: Switching N Y investment avenues Long term goal `N Y Orientation Strong Role of N Y Regulator Income N Y Generator/Replacer Liquidity Y N