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kailash

Question

different between mutual fund and ulip

Asked By: kailash
On: 30th Jan 2012 10:20 PM
Answered Within: 14 Hours

MIC Expert

Answer

There are many ways where ULIPs are actually better than MF (Mutual Funds)

1. Yes, you do get an INSURANCE COVER of minimum 5 times the annual premium with ULIPs which you do not get with MF to a maximum amount determined by the company.

2. Additional benefits like Critical Illness cover and Accidental Benefits can be purchased with ULIPs which cannot be purchased with MFs

3. No Tax Benefit is received under ordinary MF. Only ELSS schemes provide tax benefit under section 80C. Whereas all ULIPs provide tax benefit under section 80C

4. Maturity Benefit of ULIP is tax free under section 10(10)D provided the investment is kept for a period of 5 years and Sum Assured is minimum 5 times the annual premium in all those years. Whereas the maturity benefit is never tax free for MFs.

5. MF investment is very objective oriented. If the particular fund objective does not work, then the investor has to exit the MF and enter a fresh MF. Whereas the investment in ULIP is not objective oriented and hence so such fear is there.

6. Loyalty Units additions are possible in ULIPs which is not available with MFs

7. Premium Redirection and Switches are provided free for a certain number of times in a year with ULIPs and not so with MFs.

Thus mentioned are the points where ULIPs are definitely better than MFs.

Answered By: MIC Expert
On: 31st Jan 2012 1:15 PM

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