When it comes to investment choices, every individual is faced with numerous choices. However, where you plan to invest the money and how much is a personal choice. Life insurance and mutual funds are schemes that fulfill different financial needs. Life insurance is a protection scheme that lets you secure the financial future of your family in your absence. On the other hand, mutual funds are an investment tool that helps you enhance your wealth through market linked investments with minimal risks. Both mutual funds and life insurance policies have their own benefits, hence one cannot really state one better than the other. A life insurance policy is a vital component of a person’s financial portfolio, as it safeguards the financial future of your dependents. Hence, the importance of a life insurance policy cannot be overlooked. Alternatively, mutual funds are a rewarding investment to meet your long-term financial goals. Hence choosing the former over the latter is not a smart decision.
If you are still in a fix about choosing between a life insurance policy and a mutual fund, you need not feel confused. You can reap the benefits of both life insurance and mutual funds by investing in a Unit Linked Insurance Plan or ULIP. A ULIP provides a life insurance cover as well as a market linked investment under the same plan. A part of the premium paid towards a ULIP is utilized to provide you a life cover while the rest of the corpus is invested in the markets to generate profits. ULIPs are a great investment choice, as the policy holder can avail dual benefits of life insurance and investment returns from the equity / debt market. Although ULIPs invest your money in the equity and debt markets, they carry comparatively lower risks as the funds are managed by experienced fund managers just like mutual funds. Furthermore, policy holders also have the options to choose ULIP funds according to their risk appetite and financial needs.
Ideally, a sound financial portfolio should incorporate both life insurance as well as market-linked investments. Equity market investments are an effective means to boost your wealth in order to meet important financial goals of life. Rather than going through the hassles of making two different premium payments to separate policies, buying a single ULIP is a smart choice. ULIPs also offer the flexibility to adjust your returns as you pass through different stages of life. Hence, make the smart choice and enjoy the best or both worlds.