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Confused between investment in ULIPs or Mutual Fund ?
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ULIPs is sold to customer as a product that provide dual
benefit of investment as well as insurance. Mutual Funds are pure
investment where you can start your investment with a minimum amount of
Rs 500/-month. If you are looking for Investment, go for Mutual fund.
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Minimum lock in period of 5 years, further subject to policy
conditions, in ULIPs.
Investment in ELSS (Equity Linked Saving Scheme) products
ideally should be kept for long term. MFs are suitable for short to
medium term.
Exit from ULIP in the interim, would be a financial
implication, and may lose part of the premium paid. No penalty or
financial implication, discontinued from MFs. Mutual Fund schemes have
performed better than ULIP in the past.
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Investment is ULIPs upto Rs 1,50,000 is eligible for
deduction under sec 80C.Maturity amount is also tax free.
Investment upto Rs 1,50,000 in ELSS is eligible for
deduction under sec 80C. Returns and Maturity are also tax free.
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ULIPs may offer investors the first few switches free, but
once the limit is exhausted, the investor would need to pay for switching
assets from one fund to another.
Investor can switch between funds as many times they like
without any additional charges.
In Mutual fund no changes can be made till three years are
complete. If you actively switch between equity and debt , then ULIP is
good for you.
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