4 Replies to “whats ulip, mutual fund & the difference between them?”

  1. here is the difference
    ULIPs vs Mutual Funds

    Mutual Funds

    Investment amounts
    Determined by the investor and can be modified as well
    Minimum investment amounts are determined by the fund house

    No upper limits, expenses determined by the insurance company
    Upper limits for expenses chargeable to investors have been set by the regulator

    Portfolio disclosure
    Not mandatory*
    Quarterly disclosures are mandatory

    Modifying asset allocation
    Generally permitted for free or at a nominal cost
    Entry/exit loads have to be borne by the investor

    Tax benefits
    Section 80C benefits are available on all ULIP investments
    Section 80C benefits are available only on investments in tax-saving funds

  2. Mutual funds
    Mutual funds are investment companies that pool money from investors at large and offer to sell and buy back its shares on a continuous basis and use the capital thus raised to invest in securities of different companies.
    Read more at http://www.fundsavvy.com/mutual_funds_articles/mutual-funds.htm

    ULIP stands for Unit Linked Insurance Plan. It provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).

  3. ulips are basically insurance policies. Along with the insurance cover, they also offer capital gains for the amount invested.

    mutual funds generally do not have insurance covers. they are meant only for capital gains and dividend earnings.

  4. Let me explain Mutual Fnds first.

    A mutual fund is formed as a trust. Money from investors are collected and invested into various instruments like shares, debentures, bonds etc. The profit/loss if any, is distributed among the investors proportionate to their investments. The fund managers make investment decisions on behalf of the investors. The fund house charges a nominal fee for the above services. The profit/loss solely depends on the market conditions. Benefit under 80c is available in ELSS schemes upto the prescribed limit. One can expect a decent return in the long run.

    Now ULIPS
    These are a mix of Mutual funds and insurance. The insurer deducts a pre determined amount from the policy holders account. Compared to MF there is a deductions of a minimum of 25% in the first year from the premium amount on account of allocation charges. Some even charge the above amount for 2-3 years. Benefit under 80c upt prescribed is available.


    It is advisable to keep your insurance and investment seperately.
    good luck !!!

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