Life insurance

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Archana Das (Querist)
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13 July 2012 Respectd all,
i want to know the difference between ULIP and a normal Life insurance. also state which 1 is bettr.
thanks in advance

CS Divya Sorayan

CS Divya Sorayan (Expert)
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14 July 2012 Insurance is a risk management tool, a security blanket that provides you financial protection against unexpected events. When you buy insurance you effectively transfer a portion of your risk regarding, your life, home, travel, business to your insurer.

Now, ULIP is a sub set of insurance. It is a kind of insurance policy which is a combination of investment + insurance. Your insurer will invest 10% of the premiums in equities and the rest 90% in debt paper. So your ULIP would act like a mutual fund.

Equities on the other hand are kinds of stocks of companies which can be invested in. The returns on these investments would depend on how the company does. When the company does well, the value of the equity will rise and vice versa. Dabbling in equity is always more risky than debentures.

So its like a chain where if you buy insurance, you may choose for a ULIP plan which invests in equity to increase your assured sum of money after a stipulated period of time.

Archana Das

Archana Das (Querist)
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14 July 2012 thank you very much
so i think (correct me if i am wrong)ulips are better than normal insurance plans as it is safe and less risky..
and the normal insurance plan has a lesser sum assured.

Gopal S Agrawal

Gopal S Agrawal (Expert)
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15 July 2012 Unit Linked Insurance Plans are combo plans ( Insurance and Investments ). These may be better than traditional plans as period is less as 5 or 10 years as compared to 20 or 30 years. But charges are on higher side.
Best will be choose separately a pure insurance plan and a pure investment like mutual fund.

Archana Das

Archana Das (Querist)
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16 July 2012 return wil be high in ulips????

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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19 July 2012 HI ARCHANA, BUYING ULIP's IS VERY WORST THING FOR INVESTOR, you have to keep saparate insurance & iinvestmen it will yeild more returns instead of ulips.... ulip is a combo product which contain both insurance + investment ,, but it will curtail your net investment amount due to heavy administration charges.... better if you buy a insurance policy first then invest remaaning amt. in mf's equity, p.o. etc.

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