Insurance is one sector in which almost every one want to invest the reason to put your money in insurance sector may vary with other. Some like to get returns, some want to secure their future and some might want to increase their wealth.
But if you go for an insurance plan then you may have 2 choice either go with ULIP, Unit Linked Insurance Plan or with traditional or Endowment Plan.Well if you need to select between any of two then here is a comparison between ULIP Vs Endowment Plan :-
ULIP : ULIP stands for unit linked insurance plan, this insurance plan combine the benefits of life insurance policies with investment. This type of insurance plans serve the purpose of insurance of the insured during the the term of the policy and offers returns at the end of the policy term but here returns depends upon the market value of the funds in which money had been invested.
Endowment Plan: Endowment insurance plan are also called as traditional insurance plan, this type of insurance plans serve the purpose of insurance to the insured during the term of the policy and offers guaranteed returns (money back) at the end of the policy term.
ULIP Vs Endowment Plan
Choice Of Investment
In ULIP plan you can invest 100% in Equity, as we all know that ULIP plans are made for long term and equity can provide good return in long term as compared with debt oriented funds, you can later shift to debt too. On the other hand in endowment plans you don’t have any choice to make choice in equity or debt.
ULIP plans are fully transparent you can know where you money is being invested by company but in traditional plans you were not know where company is putting your money, ULIP will help you know how much return you can get and how your investment will be affected as per the changes in the market. But on endowment plans nothing is known to you and you cant predict future.
ALSO READ :- All About Unit Linked Insurance Policy (ULIP)
In ULIP you can withdraw your money if you need it once you had paid initial premium i.e for first 3 years, there is no surrender amount on ULIP and you will get the market value of your investment but on the endowment plan you have to pay a high surrender charges to company which restrict the customers from withdrawing money.
ULIP also provide you to withdraw some part of your investment so that you can keep your policy alive but this is not available in endowment plans.
ALSO READ : Difference Between ULIP And Mutual Funds
ULIP plans are fully flexible, they allows you to invest in 100% equity but on the other hand they also allows you to shift to 100% debt plan any time which makes it very much flexible, its not available in endowment plans.
Revive 2 Year Old Policy In ULIP
In ULIP you can revive a policy which premium is not paid by you from 2 years and save that plan from being lapsed, but you can not do this with endowment plans.
In ULIP plans there is a limit on charges put by company but now new ULIP comes with zero charge which and also allows you to buy them online but on endowment plans charges are unknown.
In ULIP plans your return depends on the market performance, so if you plan to stay for longer time then you will get higher returns but in endowment plans offers fixed or you can say guaranteed returns at the end of the policy term.