Before choosing any plan from both you must consult with your financial advisor or research from any platform that which type of insurance plan is better for you that will fulfill your financial requirements and future goals.
Both are the above offer you tax savings under Section 80C of the Income Tax Act.
Know what is ULIP?
Know what is Traditional Insurance Plan?
Which one is better?
The main purpose of ULIP is to provide protection as well as an investment of investor’s savings, and the purpose of the Traditional Insurance Plan is to provide protection cover only.
ULIP is a long term plan and the main objective of it to provide both protection and maximize investor’s savings by investing in different market instruments.
Whereas the main objectives of Traditional Plans are to provide protection cover only and don’t invest investor’s money in the different market tools, hence the returns in Traditional Insurance Plans are generally fixed.
3. Investment Options
With a Unit Linked Insurance Plan (ULIP), investors have full control over where their money is being invested. Investors can choose to invest 100% of their money in equity, debt, or balanced funds. On another side, Traditional Plans do not allow investors to choose investment avenues.
Under ULIP returns can be high or low depending on the market performance. Where another site under Traditional Plan returns is fixed or not flexible.
When investors are chosen ULIP, then they are fully aware of how much amount of money is being invested and what kind of market instruments it is being invested in.
In also addition, investors will receive regular updates about how their investment is doing. But in Traditional Plans, investors are informed about what they will receive on maturity.
Under ULIP there is no security involved. But another side Traditional Insurance Plans are highly secured.
ULIPs plans are flexible in the sense that there are multiple withdrawal options as per the convenience of the policyholder during times of need. The same option is not available for Traditional Plans.
Under ULIP there are 3 to 5 years of the lock-in period. Whereas Traditional Insurance Plan is generally locked in till it attains maturity.
9. SIP Option
There is a Systematic Investment Plan (SIP) option is available under ULIP. While there is no SIP option under Traditional Insurance Plan.
ULIP is a long term insurance plan, and a Traditional Plan can be short term or long term depending on the policy holder’s financial goal.
11. Switching Options
Under ULIP investors can switch from one fund to another depending on the market performance. But there is no option like this in the Traditional Insurance Plan.