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Term Insurance V/S ULIP : What Makes More Sense?

Updated On Nov 04, 2021

There are various life insurance companies that are offering different kinds of insurance products in the market and at times, it gets difficult to know the type of plan that we have to purchase. Amongst those product options, there are ULIPs and Term insurance plan, with which the policy buyers generally get confused. To know which of these products is more suitable for you, read on ahead.

Term Life Plans V/S ULIPs

The table discusses some of the basic points of distinction between a term life plan and ULIP:

Point of Distinction

Term Insurance


Kind of Insurance Product



When to Buy

When you are looking for security and higher returns in the long term.

When you wish to offer protection to your family members against any kind of mishap and protect their future financially.


No other charges except for paying the premium.

It includes various charges like fund management fee, funds allocation charges, fund switching charges, policy administration fee and agent fees.


Depends on the individual at the time of purchasing the policy. An individual must be insured under a term insurance plan ideally till the age they have dependents.

It depends upon the investor, however for good return on investment it needs to be 10-15 years.

Lock in Period

There is no lock in period and needs to be renewed on yearly basis.

The lock in period here is minimum 3 to 5 years.

Maturity Benefits

There are no maturity benefits unless the chosen return of premium policy.

A policyholder can redeem the units at the prevailing prices of the unit.

Why to Choose a Term Insurance Plan?

  • A term plan is considered to be free of risks and offers death benefits to your family members in the event of your demise.
  • The component of premium in a term plan is comparatively low from any life insurance policy.
  • The coverage or sum assured provided by a term plan is higher in comparison to any other life insurance policy.

Why to Choose a ULIP?

  • An ULIP offers the policyholder with maturity benefits.
  • ULIP offers investment opportunities alongside a life insurance cover to the life assured.
  • Choose an ULIP only in case you are thinking about a long term investment. ULIP is a long term investment scheme that helps in fulfilling your future needs and life goals. Wherein you are required to stay invested at least for a period of 10 years.

Also read: 

Types Of ULIP Charges You Must Know About

Understanding The Basics Of ULIP Investments

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.

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