ULIP Vs Endowment Plans
Updated On Nov 30, 2023
When buying life insurance, people usually focus on the amount of coverage which is how much they have to pay as a premium. Also, how long does the policy last? Rather than learning about insurance plans, usually, suggestions from friends and family are taken. In India, many people don't have much knowledge of Insurance. As per the survey in 2014 by the Ph.D. Research Bureau, almost half of the population doesn't have enough information about insurance products.
Let us Understand here in this article about which is better ULIP or Endowment plan? Both the policies are good to go but it completely depends on individuals needs and choices.
Table of Contents
Unit Linked Insurance Plans (ULIP)
Unit linked insurance plans also known as ULIPs offer dual benefits of life insurance and wealth creation. It lets the life-assured invest his corpus in market-linked fund options that will grow his corpus helping him/her to achieve a financially secure future. In case of an untimely demise of the life assured during the policy, the nominee will be provided with a death benefit under ULIP plan.
The life assured can choose a market-linked investment option as per his/her risk profile and financial goals.
Endowment Plans
Endowment plans are a type of life insurance policy that provides you with life cover and also lets you grow your corpus for retirement. These plans provide a death benefit and maturity benefit. In case the life assured passes away during the policy term, the nominee will be provided a death benefit.
In case the life assured survives the entire policy term, the life assured shall be provided with a maturity benefit.
ULIP Vs Endowment Plans - What's the Difference?
Below is the difference between ULIP and an Endowment plan:
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Difference Between ULIP and Endowment Plans |
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Parameters |
ULIP |
Endowment Plan |
|
Benefits |
ULIP is a blend of investment and insurance. These types of plans provide death benefits and options for wealth creation through market-linked investment options. |
The endowment plan provides a death benefit in case of an unfortunate demise of the life assured and this plan also provides a maturity benefit in case the life assured survives the entire policy term. |
|
Flexibility |
Life Assured has the flexibility to choose the market-linked investment option according to his/her risk appetite and financial goals. |
Under an endowment plan, there is no such flexibility but the life assured can choose to top-up his/her endowment plan. |
|
Risk |
The risk involved depends on the market-linked investment option chosen by the life assured. |
There is no risk involved in endowment plans, as these plans do not provide the opportunity to invest in market-linked investment options. |
|
Returns |
Returns depend on the market-linked investment option chosen by the life assured. |
Guaranteed returns are provided under the endowment plan as a lump sum on maturity. |
|
Withdrawals |
Partial withdrawals are allowed under ULIPs and life assured can choose to make partial withdrawals anytime during the policy term |
Partial withdrawals are not allowed under endowment plans. |
Conclusion
There is a huge difference between Unit Linked Insurance Plans and Endowment plans. Unit-linked insurance plans let you grow your corpus through different market-linked investment tools, on the other hand, endowment plans provide you maturity benefits at the end of the policy term in case you survive the entire policy tenure.
Unit-linked insurance plans have a certain amount of risk involved as you choose to invest your money in market-linked investment tools, endowment plans have no such risk involved.
Also, read
Difference Between ULIP and Term Insurance Plan
Difference Between ULIP and SIP
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
