Difference Between — Term Insurance vs ULIPs

It is generally advised to never mix “insurance with investments” however, every financial product is designed to address specific requirements and comprises both pros and cons. That gives birth to a common debate in financial planning — choosing between term plan vs ULIP.

Let’s understand the difference between term insurance and ULIP to make an informed financial decision.

What is Term Insurance?

Term insurance is the most basic life insurance policy that offers financial protection to the policyholder’s loved ones in the unfortunate event of their death. To avail of this policy, an individual is expected to pay a monthly premium determined by factors such as the age of the applicant, their health, the type of cover chosen, policy tenure, etc.

Understanding what is term insurance is essential for every working professional with dependents who would suffer in their absence. Generally, term insurance premiums are the lowest as compared to other insurance.

What is ULIP?

Unit Linked Insurance Plans (ULIPs) offer the combined benefit of insurance and investment. The difference between ULIP and term plans is that in ULIP, the premium is split into two sections. One part is the premium for insurance, and the second part is invested in bonds, equities, loans, or hybrid funds.

When the policy concludes, one is entitled to either the sum assured or the fund value of the unit-linked investments. However, for a more rounded understanding of what is ULIP , it is advised to look into the various types of ULIP plans that can be customized to meet specific financial goals.

Let’s delve into the difference between term plans and ULIP to help make an informed financial decision.

Difference Between ULIP and Term Plan

The term plan vs ULIP debate makes it challenging to determine which one would be a suitable option for an individual. Since both these products are insurance offerings, determining the difference between term insurance and ULIP becomes important for making a financial decision.

Here are the key points of difference between term plan and ULIP:

While weighing the pros and cons of term plan vs ULIP, noting the difference between term insurance and ULIP comes in handy. This way, you can compare your financial goals and choose a policy that best helps you meet them. However, if you were to choose only one from the term plan vs ULIP, let’s see which one would be best for you in a given situation.

How to Choose Between ULIP and Term Insurance?

Now that we know what is term insurance and what is ULIP, it is time to determine which one would be a suitable policy for you.

Working professionals with financial dependants such as senior parents or spouses and children can invest in term insurance. This is because if something were to happen to the sole breadwinner of the family, the dependents would have no financial support to rely on.

On the other hand, investors who seek funds at the end of the policy maturity period can opt for ULIPs. Since it offers dual benefits of life insurance with investment, investors have an opportunity to get returns at the end of the policy term.

To make the choosing easier, browse through PNB MetLife’s insurance plans , and see what they offer.

Conclusion

After analyzing the difference between term plan and ULIP, it is advised that investors don’t choose one over the other as both policies serve distinct purposes. Including these products in your financial plan ensures that you secure your financial future and the life of your loved ones appropriately.