Is ULIP better than FD
What is the difference between life insurance and ULIP?
ULIP insurance plan
ULIP is a unit-linked insurance plan. A small part of the premium you pay goes towards life insurance. The remainder is invested in stock markets. Most ULIPs give you the option of choosing between debt securities [100% safe buy, low returns 5-7%] and stocks [high risk, returns can be around 15%]. Or a mixture of both.
ULIP is not a great way to save money. There are some hidden fees that actually reduce returns. In fact, even if the returns displayed are great, they are less. For example, the premium you pay in the first year, say Rs 10,000 / - Rs 2,500 / - goes towards commission. And let's say Rs 100 goes towards insurance. Credit Rs 7,400 / - units will be purchased in your account. Even if these grow 20%, you are still at a loss. Of course, the commissions decrease year after year and stay at 5%. Then there are fund management fees that you cannot see. There is a maintenance fee that will be deducted from your balance.
Thus, the entire charging method is not transparent.
Life insurance from LIC
There are generally two types of life insurance plans
Money back / foundation plan. The concept here is the same again, you pay a premium and part of that goes towards insurance. The remainder of the LIC is invested in safe bonds. A bonus is declared every year; usually less than bank rate. At the end of the plan, you will get more than what you paid as a premium. However, if you had kept the same with Bank FD, you would have gotten more money back. So if you die, your candidate will get insurance plus bonus. If you survive, you will receive all of the accumulated bonus.
Pure Term Plan. Here the premium for the sum insured is significantly lower. If you die, your candidate will be insured here. If you survive you won't get anything.
- Who invented the self-cleaning oven?
- How is a microphone constructed?
- The era of gangsta rap is over
- Why does cancer make you tired
- Thibault-style fencing would be effective today
- Is Vietnam ready to give up socialism?
- Where do trees get their mass from?
- Why did Mark Zuckerberg choose Harvard University
- Why do we need steel beams
- What is a co-dominant allele
- Why are zambonis used
- How are taxes earned on Bitcoin interest
- Yale University 2013 enrollment statistics
- Think genetics has evolved too
- When shouldn't you travel?
- Yahoo Com blocked in China
- What is the fortune of President Xi Jinpings
- Almonds help with acid reflux
- What does wool from sheep mean
- Fenugreek and methi are the same
- What is polymorphism Why is it required
- Java EE is still used today
- How is the force related to the acceleration?
- Would you ever buy a hamster house