• 19 MAY 2016

    Difference between ULIP and Mutual Fund

    A ULIP or Unit Linked Insurance Plan is an insurance plan which carries an added advantage of giving you market-linked returns. The premium paid on a ULIP is divided into two portions; one that is allocated towards risk cover and the other that is invested in various types of funds like debt,equity,money market, financial instruments etc.This part of the ULIP is similar to a mutual fund with there being difference in the charges levied and the tax rebates. Like a mutual fund, where fund managers invest your money in different sectors, even in ULIP's, there are fund managers who invest your money in different sectors and instruments.

    A lot of people get turned off when faced with the prospect of investing in ULIP's as they feel that Mutual Funds give them better retuns in the short and medium term.While this can be true, it is also true that ULIP's can hold their own in the long-run over mutual funds.

    1) Firstly, ULIP's give insurance cover which means that in the event of death of the Life Assured, the nominees are entitled to fund value of the Sum Assured, whichever is higher. This ensures peace of mind for the individual as he knows that his family is covered and secure.

    2) Secondly, switching between funds is permitted in a ULIP which can be a decent advantage in falling markets. With this facility, you can maximise your fund allocation even when markets are not doing good.

    3) Third, investing in Insurance products offer you tax rebates under section 80C which is not available widely in mutual funds.

    4) Fourth, because of the charges associated with early withdrawals in a ULIP, an individual is incentivised to stay invested for the long term which is bound to give better returns as compared to the short term gambles that he may otherwise take in the stock market.

    5) Lastly, the returns that you receive from a ULIP is tax-free.

    However, ULIP's are badly sold as pure tax-free investment policies. Agents wrongly sell it to their gullible clients in tax season by saying that they can withdraw the amount after remaining invested for 3 years. This is a misconception since in the first three years, the charges are maximum and yields minimum. In ULIP's ,the overall charge structure comes down significantly over the long-term ,allowing better and bigger allocation of premium to your chosen fund, thus assisting in wealth creation. Therefore, it's important that one stays invested in a ULIP for 10-15 years or even longer. The longer one stays invested in ULIP's ,the better would be the return on investment.

    • pvenkata.subramanian@edelweisstokio.in

      Dec 15, 2017 | 18:12 PM - IST

      Firstly ULIP's give insurance cover which means that in the event of death of the Life Assured, the nominees are entitled to fund value of the Sum Assured

    • pvenkata.subramanian@edelweisstokio.in

      Dec 15, 2017 | 18:12 PM - IST

      In the event of death nominee receives sum assured or fund value which ever is higher

    • Leave a Reply
  • 5 NOV. 2018

    What if Things Don’t Go As Planned?

    Any human being doesn’t want to even imagine about his / her death. All of us wants to believe that we are immortals. In Mahabharata, there was a dialogue between Yudhishtira and Yaksha where Yudhishtira answered the questions asked by Yaksha. One of the questions asked by Yaksha was ‘What is the greatest wonder?’. Yudhishtira replied ‘Day after day countless people die. Yet the living wish to live forever. O Lord, what can be a greater wonder?’

    read more
Understand your insurance needs in few minutes

just give us a miss call 022 6611 6028


request a call back

for a scheduled call back, please share:

contact us

branch locator

Please enter your mobile number

enter your contact details

is there an issue? let us help you!

nothing to worry.

just fill in these details. we’ll help you out.

check status


Don’t wait. Complete your application by entering your transaction id.


Please enter your email address to get an email summary of your needs


By entering my contact details I authorize Edelweiss Tokio Life Insurance to Call or SMS me with reference to this enquiry. This overrides the DND registration of TRAI.