Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin
Hurry Up!
Save upto ₹54,600 in taxes under 80C & 80D. Buy a term insurance plan now!
View Plans

Which Is Better? Endowment Or ULIP?

Updated On Nov 22, 2021

Endowment policies, identical to unit-linked insurance plans, are one of the country's most popular financial products since they blend the opportunity to invest with insurance coverage (ULIP). In other aspects, however, it varies from a ULIP. When you participate in an endowment plan, you get life insurance while also accumulating cash for your pension, children's future, and wedding, or property. On the death of the policyholder, the sum promised is paid to the policyholder's relatives or designee. If the policyholder lives to the end of the policy term, he will receive the maturity amount plus any endowment plan bonuses.

ULIPs present customers with three benefits: coverage, wealth building, and tax savings. The amount you pay as a fee in ULIPs is split between investments and risk management. You can engage in a variety of funds based on your risk tolerance and investment objective.

While endowment and term policies provide fixed returns on the insured's death or after maturity, ULIP returns are not assured but can be larger because they are contingent on the fund's market efficiency. You may also switch products and alter your investment plan with ULIPs with minimal effort.

Why Should I Invest In ULIPs?

The following are some of the reasons why you should invest in a ULIP:

1. Flexibility

  • With a ULIP, you can: Switch investment funds
  • Partially remove funds
  • Make one-time lump-sum contributions in the form of top-ups.

2. Significant Returns

ULIPs offer a variety of investment products, some of which are equity-based and provide high returns over time.

3. Insurance Cum Investment

A ULIP offers both life insurance and investing opportunities. You gain both personal and family safety as well as the opportunity to build wealth.

4. Rider Add-Ons

For an extra cost, you can extend your ULIP plan with rider add-ons like accidental death, term, and critical illness coverage.

5. Transparency

You can monitor the performance of your investment portfolio. The insurance company keeps you up to date on all charges, such as the number of units issued, and so on.

6. Switching Funds

You can easily switch between investment funds and make changes to your entire portfolio if necessary.

7. Financial Security

ULIPs allow an investor to establish a large corpus over their investment term, which can be used for retirement planning, child education, marriage, and other purposes.

Why Should I Invest In Endowment Plans?

You should invest in an endowment policy for the following reasons:

1. Guaranteed Returns

Endowment policies promise returns at maturity, survival, and death. The proposed returns are unaffected by market performance and can help you save money.

2. Bonus

In a participation policy, the insurer transfers a portion of its earnings to the policyholder in the form of bonuses. Throughout the investment period, the policy receives a Simple Reversionary Bonus and a Terminal Bonus.

3. Financial Objectives For The Long Run

When invested over a lengthy period, an endowment plan yields substantial returns. This will assist you in achieving your long-term objectives.

Conclusion

As illustrated, both systems are proposed with various investment purposes in mind for different economic aspects. Under the framework that has been created for them, both plans perform admirably. In the end, the desire of the investor will determine which of the two techniques they chose. Endowment plans are similar to life insurance policies, but they have the added benefit of promoting savings over the policy's term. The foundations of endowment programs, which come with a host of benefits, are investing and generating a savings corpus. During a ULIP, your premium is invested in the funds and proportions that you choose. When the insurance matures, you'll get the value of your fund as a lump-sum maturity payout. The money insured is paid to the policy's beneficiary in the case of the policyholder's premature death. ULIPS is a great way to safeguard your cash while also providing a plethora of other advantages.

Also read: 

How To Buy the Right Endowment Plan?

Benefits Of An Endowment Policy Which Makes It A Must Have

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.

 

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 66 Lacs+ happy customers