How Ulips Compare With MFs
Outlook Money|January 2024
It's generally accepted that Ulips are not as investor-friendly as mutual funds. They allow no easy exit, and have relatively higher charges than MFs
How Ulips Compare With MFs

It is a generally accepted notion that unit-linked insurance plans (Ulips) are not investorfriendly due to their relatively higher charges and lack of flexibility in exiting from a policy, apart from shifting from one sub-fund to another. It is usually recommended that investments should be executed through mutual funds (MFs), and for matters of insurance coverage, you should buy term insurance.

This view is correct. However, today we will look at certain other aspects of Ulips. If you are approached to buy a Ulip, or if you are considering one and want to compare it with mutual funds, then here are the things you should be looking at.

Factors For Comparison

The most important element for comparison, is the charges on the product. You may say performance is most important as that is what you get as returns, net of charges. However, future performance is by definition, unknown. You can look at historical performance for only getting a perspective.

If a Ulip fund is underperforming, you can shift from one fund to another like from equity to debt, but it is difficult to exit from the product.

Charges are the biggest contention between Ulips and mutual funds, and it is something measurable.

Quantifying Charges

In Ulips Long ago, Ulips came with very high front-loaded charges, which was deducted from the premium that you paid, and was passed on to the intermediary. Even now, there are front-loaded charges that are on the higher side.

From the earlier days of excessive front-loaded charges to current times of relatively-lower-but-still-onthe-higher-side charges, there was a regulation passed by the Insurance Regulatory and Development Authority of India (Irdai) in 2010. Rather than putting a cap on frontloading per se, the cap was put on overall charges. This was referred to as "reduction in yield".

この記事は Outlook Money の January 2024 版に掲載されています。

7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。

この記事は Outlook Money の January 2024 版に掲載されています。

7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。

OUTLOOK MONEYのその他の記事すべて表示
Stay Ahead Of AI-Powered Cyber Fraud
Outlook Money

Stay Ahead Of AI-Powered Cyber Fraud

AI has become an integral part of our lives, right from customer service at banks to insurance claims. But it has now become a powerful arsenal for the fraudsters too who are increasingly using AI to scam individuals and corporations alike to commit fraud. The key is to stay vigilant

time-read
7 分  |
December 2024
Travelling To Europe? Pack In The Essential Covers
Outlook Money

Travelling To Europe? Pack In The Essential Covers

Smart travellers must know that insurance is a must-have. From essential health coverage to theft protection and trip interruptions, know what you need for a worry-free Europe trip

time-read
6 分  |
December 2024
How To Spend Wisely This Year-End
Outlook Money

How To Spend Wisely This Year-End

We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key

time-read
5 分  |
December 2024
12 Books Devina Mehra Loved Reading In 2024
Outlook Money

12 Books Devina Mehra Loved Reading In 2024

Listing books of her choice, among the ones she reads during the year, is ace investor Devina Mehra's favourite year-end activity. She says it's a daunting task to pick around 12 books from a list of 50.

time-read
6 分  |
December 2024
How Do You Define Happiness?
Outlook Money

How Do You Define Happiness?

Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness

time-read
5 分  |
November 2024
Here's How To Buy An ETF?
Outlook Money

Here's How To Buy An ETF?

Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.

time-read
1 min  |
November 2024
Tax Reforms: What's In Store?
Outlook Money

Tax Reforms: What's In Store?

The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms

time-read
10+ 分  |
October 2024
Health Insurance Sub-Limits
Outlook Money

Health Insurance Sub-Limits

Sub-limits in health insurance are restrictions placed by the insurance company on the SP maximum amount they will pay for specific expenses that are part of the total hospital bill.

time-read
2 分  |
October 2024
Delayed Gratification, Humility, Understanding Inflation And Risks Key To Financial Success
Outlook Money

Delayed Gratification, Humility, Understanding Inflation And Risks Key To Financial Success

The journey to financial success is continuous, requiring patience, education, and disciplined decision-making.

time-read
2 分  |
October 2024
Multi-Asset Investing is The Financial Equivalent of A Well-Balanced Diet
Outlook Money

Multi-Asset Investing is The Financial Equivalent of A Well-Balanced Diet

Just as you track the calories and nutrients for a well-balanced diet, you need a balanced portfolio that has multiple assets to balance the risks and returns.

time-read
2 分  |
October 2024